expected in 2017
South African’s need to brace themselves for the year ahead.
Due to 2016’s R23bn revenue shortfall, Treasury is looking to compensate for the lower tax revenue. Unfortunately, this means that additional tax increases are in store. On top of the R15 billion that was announced in this year February’s budget speech, an additional increase of R13 billion is expected in 2017.
That’s not all. What’s more, over the course of the next to year’s government plans to raise taxes to a total of R43 billion
Says Treasury: “Low economic growth rates have led to revenue shortfalls.” Shortfalls which will be covered by:
- Reductions to the expenditure ceiling of R10 billion in 2017/18 and R16 billion in 2018/19.
- Tax measures to raise an additional R13 billion in 2017/18. Combined with the proposals announced in the 2016 Budget, this brings the total increase next year to R28 billion. Government will also propose measures to raise additional revenue of R15 billion in 2018/19.
With Treasury juggling too many balls than it can handle, South African’s will need to tighten their belts for the coming year.
Says chartered accounting and tax advisory firm Octagon Chartered Accountants: “It is clear that the fiscus is looking for more money, and they will find it in the form of increased taxes and increased tax compliance. As a business owner, you should be prepared for increased SARS tax audits. If you are not giving it to them they will find it.”
This is why Octagon advises the use of an external auditor and tax firm in the coming year. “With tax law being so complex, you don’t want to leave your business open to risk.”
Since new taxes are on the horizons, many South Africans, including business owners, will need to find cost-effective ways to operate their businesses and conduct their affairs.
While these proposed increases by government will come in incremental stages, the question remains, where these increases will fall?
With Treasury making no mention of the fact, time will tell whether these increases will be in the form of corporate tax, value-added tax, private tax, sin tax or the fuel levy.
But we’ll have to wait until next year February in order to find out what the proposed tax increases will be when the finance minister tables the 2017/18 budget speech.