South Africa’s 2014 budget includes some measures resulting from the work of the Tax Review Committee. The Committee’s recommendations relate to the compliance burden of small and medium-sized enterprises. In particular, the turnover tax regime, for businesses with an annual turnover of up to ZAR1m (USD93, 000), will be amended to further reduce the tax burden on such enterprises. It is proposed that the requirements of the tax should be simplified, and its thresholds and tax rates should be adjusted. It is proposed that turnover up to ZAR335, 000 should not be taxed, and that the maximum tax rate should be reduced from the current 6 percent to 5 percent. Consideration is also being given to replacing the graduated tax structure for small business corporations with a refundable tax compliance credit, while amendments will be made to the venture capital company tax regime. Subject to appropriate tax treatment, amendments will be made to the intellectual property rules as part of this reform.

There would also be an increase in the tax-free lump-sum amount paid out of retirement funds from ZAR315,000 to ZAR500,000, to the benefit of those on lower incomes who did not benefit from deductible contributions. Legislation on tax-exempt savings accounts will proceed this year, to allow investments in bank deposits, collective investment schemes, exchange-traded funds and retail savings bonds.

Reforms to the tax treatment of risk business for long-term insurers are also proposed. Profits from the risk business of a long-term insurer will be taxed in its corporate fund, similar to the way short-term insurers are taxed currently.