The Bounce Back Support Scheme, a loan guarantee mechanism of R15 billion which was first highlighted in the February 2022 budget speech, has come into effect in April 2022. The scheme aims to facilitate job creation and economic growth in the wake of shocks such as the Covid-19 lockdowns, the July 2021 civil unrest in Kwa-Zulu Natal and Gauteng, and the ongoing flood disaster.
The Minister of finance Enoch Godongwana tabled his Budget review on the 23rd February 2022. The following were the key tax issues arising.
On the 24th March Lesetja Kganyago, Governor of the South African Reserve Bank, announced an increase in the repurchase rate by 25 basis points to 4.25% per year, with effect from the 25th of March 2022.
Medium‐term fiscal policy is focused on reducing the budget deficit and stabilising the debt‐to‐GDP ratio. To support this consolidation, government will use a portion of higher‐than‐anticipated tax revenue to narrow the deficit while increasing non‐interest expenditure to support economic growth, job creation and social protection.
Main budget non‐interest spending increases by a net R282.3 billion over the medium‐term expenditure framework (MTEF) period compared to the 2021 Budget. This increase is supported by higher‐than‐anticipated revenue collections and does not jeopardise the path to deficit reduction. Total consolidated government spending will amount to R6.62 trillion over the next three years. Additional allocations of R110.8 billion in 2022/23, R60 billion in 2023/24 and R56.6 billion in 2024/25 are made for several priorities that could not be funded through reprioritisation. These include the special COVID‐19 social relief of distress grant, the continuation of bursaries for students benefiting from the National Student Financial Aid Scheme, and the presidential employment initiative. Debt‐service costs will average R333.4 billion per year.
Following a weaker‐than‐expected third quarter, economic growth for 2021 has been revised down to 4.8 per cent, compared with 5.1 per cent estimated at the time of the 2021 Medium Term Budget Policy Statement (MTBPS). The medium‐term growth outlook has improved moderately. Treasury projects real economic growth of 2.1 per cent in 2022, the year in which the economy is expected to return to pre‐pandemic production levels. GDP growth is expected to average 1.8 per cent over the next three years.
The World Bank Group Board of Executive Directors has approved South Africa’s request for a $750 million development policy loan (DPL). This loan will support the Government of South Africa’s efforts to accelerate its COVID-19 response aimed at protecting the poor and vulnerable from the adverse socio-economic impacts of the pandemic and supporting a resilient and sustainable economic recovery.
Government remains committed to structural reforms designed to lower the cost of doing business and create a more competitive economy. Over the medium-term, the following reforms will be accelerated:
The finance minister presented his maiden MTBPS on the 11th of November. Below are some key extracts:
A highly disciplined fiscal policy is to be maintained if we are to enjoy economic growth and stability in the medium to long term. Below are some key points extracted from the Medium-Term Budget Policy Statement (MTBPS):
Below is a brief synopsis of the economic outlook as presented at the Medium-Term Budget Policy Statement (MTBPS).
The director’s role has without a doubt become more onerous amidst the Covid 19 pandemic. However, the Companies Act makes provision for operating in a virtual world, which includes, inter alia:
Newly appointed Minister of Finance, Mr Enoch Godongwana will table the MTBPS on the 4th of November at 14h00. The MTBPS sets out the policy framework for the Budget that is presented every February, updates National Treasury's economic forecasts, adjusts the budgets of government departments and makes emergency changes to spending.
Penalties for late filing of Pay As You Earn (PAYE) returns was introduced this year. SARS is in the process of enhancing their Dispute Resolution process to allow for this penalty to be disputed separately from a PAYE late payment penalty.
The structure and essential requirements for a valid trust can be found below:
The South African Special Risks Insurance Association (SASRIA) will form a key part of the intervention to help insured businesses restore their operations. Together with reinsurers, SASRIA has already begun its claim administration process. Pay-outs will be provided to all covered businesses. Crucially, government has decided to provide full financial backing to SASRIA should it exceed its solvency limits. The National Treasury is putting in place the necessary arrangements to ensure that this commitment is met should it be needed.
There have been a number of amendments gazetted this year to the VAT Act. The amendments came into effect on 1 April 2021 unless otherwise stated. A brief summary of some of the more important VAT amendments is provided below:
The Information Regulator (Regulator) announced on 18 June 2021 that they are granting an extension on the application on processing as set out in Section 58(2) from 1 July 2021 to 1 February 2022. It is important to note that this is not an extension of compliance to the POPIA but only refers to the implementation of Section 58(2). Section 58 deals with the requirements that a responsible party must notify the Regulator if processing is subject to prior authorisation.
The Protection of Personal Information Act (no.4 of 2013) (hereinafter referred to as 'POPIA' or 'the Act'), which gives effect to the Constitutional right to privacy in South Africa, commenced on the 1st July 2020. There has been a grace period for one year.
Doing business in South Africa can be daunting given the complex raft of regulations and company law. Section 77 codifies liability for directors and prescribed officers. It sets out civil liability (delict and breach of fiduciary duty), and then in sub-section 3, sets out specific statutory liabilities.
Retention periods:
The general provisions under POPIA will apply equally to any personal information processed by an employer as part of an employee’s employment, and all employers have until 1 July 2021 to ensure that their workplaces are fully POPIA compliant.
Codes of Conduct:
Early in January 2021, Facebook’s messaging app WhatsApp received massive backlash in relation to an update of its privacy policy which was meant to take effect on the 8th of February 2021. Effectively, the update allows for new functionality to the businesses feature by allowing WhatsApp to reserve the right to share the different data it collects from you to other Facebook based apps.
