The National Treasury released the Explanatory Memorandum and the Memorandum on Objects (the Memoranda) on the proposed amendments contained in the draft Taxation Laws Amendment Bill (TLAB) 2016 and the Tax Administration Laws Amendment Bill (TALAB) 2016, respectively. The key explanatory comments contained in the memoranda include the following.
- Tax on sugar-sweetened beverages: With effect from 1 April 2017, a tax to be known as sugar tax will be imposed on sugar-sweetened beverages. Sugar tax will be imposed on sugar content at a rate of ZAR 0.0229 (2.29 cents) per gram of sugar. The sugar tax is to be borne by the end consumer and is estimated to result in a 20% increase in the cost of sugar-sweetened beverages.
- Repeal of withholding tax regime on cross border services: The 15% withholding tax (WHT) imposed on service fee payments made by residents to non-residents, which was introduced in 2013 but is not in force, will be repealed as from 1 January 2017.
- Disclosure requirement for reportable arrangements: In lieu of the WHT on cross-border services, all services provided to residents which satisfy the reportable arrangement criteria must be reported to the Revenue Service. This reporting requirement is effective from 3 February 2016 in line with Notice 140, Government Gazette No. 39650.
- Introduction of anti-avoidance measures on the transfer of assets to trusts – individuals: With respect to the payment of estate duty and donation taxes, and to reduce tax avoidance on transactions among connected persons through the use of interest-free loans, anti-avoidance rules focusing on interest-free loans or loans with interest below market rates will be introduced effective 1 March 2017.
- Expansion of incentives for investments in public infrastructure – mining companies: Under the Social and Labour Plan (SLP), and in agreement with the Department of Mineral Resources, mining companies are required to contribute towards community development in areas surrounding the mine. Consequently, effective 1 April 2017, mining companies are entitled to claim deductions for capital expenditure incurred in the provision of public infrastructure to the host community. Eligible public infrastructure will include expenditure on roads, drainage systems, schools, etc. for the use of employees and the host community.
- Provision of accelerated capital allowances for renewable energy projects: From 1 April 2016, all large-scale renewable energy projects which fulfil the set criteria are entitled to accelerated capital allowances for capital costs incurred on supporting infrastructure such as the construction of roads and security fences. The capital costs and accompanying allowances are to be ring-fenced and rolled over to succeeding years of assessment.
