On 26 February 2020, the Finance Minister, Tito Mboweni, delivered National Budget for the year 2020-2021. Some provisions of budget 2020-2021 include:
Corporate income tax
The standard corporate income tax rate was proposed to remain unchanged under this budget.
Restriction on interest deduction
The budget proposed to introduce interest limitation provisions along with significant changes in case of cross-border loans. The Government proposed to limit interest expense deductions to 30% of earnings for assessment years commencing on or after 1 January 2021. A discussion document regarding this is available on the National Treasury website and the due date for comments is 17 April 2020.
Treatment of losses
The budget proposed to limit the ability of companies to fully offset assessed losses from previous years against taxable income. Also, the Budget proposes to broaden the corporate income tax base by restricting the offset of assessed losses carried forward to 80% of taxable income, for years of assessment commencing on or after January 1, 2021.
Personal income tax
The Budget proposed to give tax relief by increasing the inflation in the brackets and rebates.
VAT
The Budget proposed not to change the standard VAT rate.
Excise duties
Under the draft budget, excise duties on specific alcohol and tobacco products was proposed to be increased by between 4.4 and 7.5%.
