Trade-offs required to achieve shared prosperity Deloitte commentary on South Africa Budget 2020/21 - Making an impact that matters
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Trade-offs required to achieve shared prosperity Deloitte commentary on South Africa Budget 2020/21 Making an impact that matters
Budget 2020/21 | Deloitte Commentary
Budget 2020/21
“ Winning requires hard work,
focus, time, patience and resilience.
Achieving economic growth and higher
employment levels requires a plan."
Minister of Finance
Mr Tito Mboweni, 26 February 2020
2
Foreword
Delia Ndlovu, Managing Director,
Africa Tax & Legal
Finance Minister Tito Mboweni’s 2020 be significantly lower than the 2019 large tax increases over the past five years,
Budget Speech was delivered against the mid-term budget policy statement (MTBPS) the difference between projected and
backdrop of President Cyril Ramaphosa’s estimates. Budgeted gross tax revenue collected revenue has continued to widen.
State of the Nation Address in which the for 2019/20 was R1.42 trillion (the revised This is attributed to slow economic growth
President made the following sobering estimate is R1.36 trillion). This means that and a weakened South African Revenue
comments: the revised gross tax revenue for 2019/20 Service (SARS). As a result, it is believed
is R63 billion less than budget. This has that further substantial tax increases are
“Our country is facing a stark reality. Our
worsened since the MTBPS, however, the unlikely to be effective as it is conceded
economy has not grown at any meaningful
gross tax revenue for 2019/20 is still 5.5% that South Africa already has a relatively
rate for over a decade. Even as jobs are
up on last year. high tax-to-GDP ratio compared to similarly
being created, the rate of unemployment is
developed countries.
deepening. The recovery of our economy Budgeted expenditure for 2020/21 is R1.95
has stalled as persistent energy shortages trillion (2019/20 revised estimate: R1.84 Accordingly, government will not raise
have disrupted businesses and people’s trillion). The largest portion of the budget additional revenue from tax proposals
lives. Several state-owned enterprises has been allocated to learning and culture for 2020/21. Therefore, it seems clear
(SOEs) are in distress, and our public (R396.4 billion – increased by 3%) followed that the strategy for addressing South
finances are under severe pressure.” by social development (R309.5 billion – Africa’s burgeoning debt levels is focused
increased by 9%) and health (R229.7 billion on containing public expenditure rather
Against the backdrop of this deteriorating
– increased by 3%). Debt-service costs of than raising taxes. To achieve fiscal
economic outlook, the Minister of Finance
R229.3 billion (increased by 12%) remain sustainability, the Minister announced a
has reiterated in this budget that South
relatively high and curtail the ability to spending drop of R156 billion over the next
Africa must strive for fiscal sustainability,
further invest in areas such as economic three years relative to last year’s Budget
measured as stabilisation of the debt-to-
development which sees an allocation of projections. The makeup of this spending
GDP ratio, by moderating spending as a
R211.5 billion (increased by 6%). drop includes a baseline spending
share of GDP and reducing the wage bill
reduction of R261 billion (made up of a
as a share of overall spending. The budget The budget deficit is expected to grow to
first part of approximately R100 billion
indicates that there is a realisation that R370.5 billion (2019/20 originally at R243
adjustments on programme spending and
there are some difficult, painful choices billion) or 6.8% of GDP. Gross national
a second part of approximately R160 billion
and trade-offs which will be needed. This debt will reach R3.56 trillion, amounting
from slashing the public sector wage bill in
will not be easy, it will be a tricky road to to 65.6% as a share of GDP by the end of
the medium term). This is partially offset
navigate with affected stakeholders. 2020/21.
by R111 billion of various additions and
The Minister indicated a bleak economic It is perhaps as a result of this current reallocations, some of which is for SAA and
growth context of the budget by state of play, that many commentators Eskom.
indicating that South Africa’s economy is anticipated wide-ranging tax increases.
expected to expand by only 0.9% in 2020. However, as pointed out in National
Consequently, tax revenue is expected to Treasury’s Budget Review 2020, despiteBudget 2020/21 | Deloitte Commentary
Gross tax revenue for 2020/2021 is The budget also focussed on strengthening Today’s Budget Speech fully acknowledges
expected to reach R1.43 trillion, which is SARS, both from a governance perspective the tough economic situation that we face
26.3% of GDP. Around 80% of the gross as well as a capability perspective. In as a country. Evidently, the strategy for
tax revenue for 2020/21 (of R1.4 trillion) is keeping with global trends, emphasis will addressing this relies on achieving fiscal
expected to comprise of the following: likely also be placed on the digitisation sustainability by taking steps to stabilise
of SARS as a means of improving the tax the debt-to-GDP ratio and relook at and
• personal income tax - R546.8 billion authority’s efficiency and effectiveness. optimise government expenditure –
(2019/20 revised budget: R527.6 billion) Additional tax revenue will hopefully flow especially by tackling the public sector
from a more effective SARS. wage bill and wasteful expenditure – rather
• value-added tax - R360.6 billion (2019/20
than by further burdening taxpayers.
revised budget: R344.2 billion) In addition to the measures announced
by the Minister for broadening the
• corporate income tax - R230.2 billion
tax base, emphasis should be placed
(2019/20 revised budget: R216.7 billion)
on multinational firms operating in a
growing digital economy. While this is
While no significant tax increases have acknowledged in National Treasury’s
been proposed, government will seek Budget Review 2020, there are no tax
to broaden the corporate tax base. proposals that specifically address the
This is to be achieved by minimising tax issue and the approach that appears to
incentives and introducing new interest have been adopted is to wait and see
deduction and assessed loss limitations. where negotiations amongst members
The possibility of future reductions to the of the Organisation for Economic Co-
corporate tax rate was also mentioned in operation and Development (OECD) lead.
order to, amongst others, improve South
Further significant themes emerging
Africa’s competitiveness as an investment
from the budget include funding of the
destination. Additional revenue raised from
proposed sovereign wealth fund, lowering
indirect taxes is to be offset by personal
the cost of doing business, renewed focus
income tax relief. Relief in personal income
on illicit criminal activity and a new law to
taxes is to be achieved by above inflation
stop excessive salaries at public entities.
increases in the personal income tax
Emphasis was also placed on measures
brackets and the primary, secondary and
to address youth unemployment – with
tertiary rebates. Detailed commentary on
further details to follow in the MTBPS.
some of these tax proposals is provided in
this publication.
4Budget 2020/21 | Deloitte Commentary
Economic outlook: moving forward,
slowly…
South Africa’s economy continues to Despite the continued low growth to inter alia slower than expected economic
struggle. Load shedding, rising debt, policy environment, Minister Mboweni emphasised growth and more financial support to SOEs.
uncertainty, wasteful expenditure, misfiring that “we are moving forward”. South Africa The budget deficit is expected to narrow to
state-owned enterprises (SOEs) and the boasts the most diversified economy in 5.7% in 2022/23.
inability to make difficult structural reforms Africa, a sound macroeconomic framework,
Unsustainable debt-to-GDP ratios were
have been weighing down the country’s strong institutions, and a young population
already flagged in Minister Mboweni’s 2019
economic growth and competitiveness over – key foundations for economic growth.
Medium-Term Budget Policy Statement
the past decade. Furthermore, low inflation, interest rate
(MTBPS). The gross debt-to-GDP ratio is now
reductions, and the ongoing reform agenda
“Winning requires hard work, focus, […] expected to have increased to 61.6 percent
may indeed “jump start the economy”.
and resilience”, said Finance Minister Tito in 2019/20 (previously estimated at 56.2%
Yet many downside risks to an economic
Mboweni, reading his 2020 Budget Speech. in the 2019 Budget). It is expected to mount
recovery remain.
to 65.6% in 2020/21 and 71.6% in 2022/23
With growth for 2019 revised down to 0.3%,
The disappointing economic environment – up from previous forecasts. Debt is not
and growth projections for this year only at
has not improved the public finances expected to stabilise over the medium term.
0.9% , reaching 1.6% by 2022, indeed, hard
outlook. The consolidated budget deficit is
work needs to persist to unlock the country’s
forecast to expand further from 6.3% of GDP
growth potential.
in 2019/20 to 6.8% of GDP in 2020/21, owing
Gross debt-to-GDP outlook, 2015/16-2022/23
2019 Budget 2020 Budget
71.6
72
69.1
65.6
Per cent of GDP
64
61.6
56.7 58.9 59.7
56 57.8
51.0 56.2
55.6
50.5
48.9
48
2022/23
2020/21
2021/22
2019/20
2018/19
2015/16
2016/17
2017/18
Source: National Treasury
Halting this fiscal deterioration requires dominated by debt-service costs at 12.3% the cost of doing business through
implementing various measures. As the over the 2020/21 to 2022/23 period. modernising network industries and
2020 Budget outlines, these measures Although learning and culture, and social preferential measures for small businesses;
include a shift in the composition of development spending are the top key restructuring SOEs; and implementing
spending, slower non-interest expenditure spending categories, debt-service costs the reimagined industrial strategy among
growth such as moderating growth in also make up the third largest spending others, will need to gain more momentum
the public service wage bill, as well as the category over the next three years. and yield visible results going forward.
ongoing restructuring of SOEs. Other
Consolidated revenue is revised down to While some of reforms are already
measures include a greater focus on
R1 583.9 billion in 2020/21, partly due underway although at varying speeds,
efficiencies in spending, with key reforms
to the government’s decision not to the most urgent of these is to ensure the
already underway. Spending cuts of
implement additional tax revenue restructuring of the electricity sector, with
R261 billion over the next three years are
measures, with some tax relief granted, as R230 billion allocated over the coming
proposed.
well as the slower than previously expected decade towards this end. Inadequate and
Still, total expenditure increases to growth environment. interrupted power supply will continue to
R1 954.4 billion in 2020/21 from a revised be among the largest downside risks to the
Fundamental pillars to the government’s
R1 843.5 billion for 2019/20. Average economic and fiscal outlook of South Africa.
economic reform agenda, such as lowering
nominal growth in spending remains
5Budget 2020/21 | Deloitte Commentary
Tax policy proposals
Tax Policy Proposals Curtailing Excessive Corporate 1 January 2021. The Budget Review
Interest Deductions states that the proposal is viewed as
The Minister announced that no major tax
a reasonable approach that affects
increases were proposed for 2020/21. The It is proposed to restrict net interest
all businesses equally, rather than
following are the major proposals: expense deductions for companies to
restricting the number of years of carrying
30% of earnings (EBITDA) for years of
forward assessed losses, which would
• personal income tax brackets and assessment commencing on or after
disproportionately hurt businesses with
rebates are to be adjusted to give above 1 January 2021. Consultation on the design
large initial investments or long lead times
inflation relief for individuals. In the prior of this proposed interest limitation begins
to profitability.
year no relief was effectively granted for immediately and a discussion paper has
inflation been published on the National Treasury International tax
website with a closing date for comments
• corporate interest deductions are going The transfer pricing rules do not apply
of 17 April 2020.
to be limited to combat base erosion and where no tax benefit is derived in a
profit shifting Based on the analysis conducted, non-arm’s length transaction between
government proposes to implement the two foreign connected parties (one
• the ability of companies to fully offset
OECD recommendations. Illustrative being a CFC). Government believes that
assessed losses from previous years
examples show that replacing the existing circumstances may arise where the SA
against taxable income will be restricted
interest limitation rules (specifically those resident shareholder of the CFC may
• the fuel levy is to be increased by 25c in section 23M of the Income Tax Act) with derive a tax benefit as a result of a lower
per litre which consists of 16c per litre the OECD approach will provide a more inclusion of the CFC income. To address
increase in the general fuel levy and 9c uniform approach to all interest payments the aforementioned situation it is therefore
per litre increase in the Road Accident flowing out of the country (regardless of proposed that the legislation be amended
Fund levy from 1 April 2020. which country the loan emanates from), to refer to a tax benefit that may be
as well as enhance the level of base derived by a person, in relation to a CFC.
• the annual contribution limit to tax-free
protection. Government proposes to
savings accounts is to increase by R3 000 Corporate rules
restrict net interest expense deductions
per annum to R36 000 per annum from
to 30% of earnings. This is a decrease from Amendments will be proposed to the
1 March 2020
the current 40 per cent (adjusted according anti-avoidance provisions contained in
• excise duties on alcohol and tobacco are to prevailing interest rates) of earnings intra-group corporate rule to address
to increase by between 4.4% and 7.5% interest limitation. The rules should only an anomaly. It is understood that the
apply where the recipient is not subject to interaction between the anti-avoidance
• a new excise duty on heated tobacco
tax in South Africa. rules for de-grouping, and rules for the
products is introduced with immediate
transfer of assets and the assumption of
effect at a rate of 75% of the cigarette It is proposed that the new rules replace
related debt may result in double taxation.
excise rate section 23M. Transitional measures for
existing loans will be considered for third- An amendment will be proposed to the
• the exemption of foreign remuneration
party loans. unbundling corporate rule to close a
earned by South African residents is to
loophole that has come to the attention of
be adjusted to R1.25 million from the The OECD has recommended countries retain
government. At present the rollover relief
current proposed exemption of targeted rules that are in place to curtail base
does not apply if, after the transaction,
R1 million from 1 March 2020. The tax erosion. Section 23N is an existing targeted
20 percent or more of the shares in
on foreign remuneration is due to be rule, which will remain in place.
an unbundled company are held by
implemented for the first time on this
Limiting the Use of Assessed Losses to non-residents either alone or together
date.
Reduce Taxable Income with individuals connected to those non-
residents. Government believes that the
Government proposes broadening the
These and other tax proposals are current rule creates a loophole. To close
corporate tax base by restricting the
considered in further detail below. this loophole it will be proposed for the
set-off of carried forward assessed losses
20% rule to apply irrespective of whether
against current year’s income to 80%
non-resident shareholders are connected
of such taxable income. The change is
to each other.
proposed with the effect from years of
assessment commencing on or after
6Budget 2020/21 | Deloitte Commentary
Acquisition of assets in exchange for refinements to these rules will be There has also been an allocation
debt issued proposed. focused on township economies, with
R2.8 billion set aside for the Township
Government will propose amendments Incentives
Entrepreneurship Fund to facilitate
to address anomalies arising on the
National Treasury proposes introducing a improved access to finance in the lower
acquisition of assets in exchange for debt
28 February 2022 sunset date for certain LSM
issued. At issue is whether the specific
tax incentives. Government will review the
base cost rule for debt issued on the • allocations for special economic zones
incentives in question before the sunset
acquisition of assets overrides the Income in the Infrastructure Investment
date to determine whether they should be
Tax Act’s anti-avoidance provision for Support sub-programme are expected
extended.
transactions between connection persons. to increase at an average annual rate
The section 12I tax incentive related of 13%, from R1.1 billion in 2019/20 to
Mining capital expenditure
to industrial policy projects will not be R1.6 billion in 2022/23, yet government
Taxpayers deriving income from mining renewed beyond 31 March 2020. The does not intend to extend tax incentives
operations are permitted to claim an urban development zone incentive will be beyond the six special economic zones
accelerated capital expenditure deduction. extended for one year while a review of the that have been approved by the Minister
Historically, it was understood that only incentive is completed. Where incentives of finance.
the mining rights holder qualified for the do not currently have sunset dates,
• government will continue to offer
deduction. Although the Supreme Court of government intends inserting such dates
Industrial business incentives worth
Appeal held in March 2019 that a contract to avoid benefits continuing indefinitely
R18.5 billion, and much of this budget
miner also qualified for the accelerated without adequate oversight.
will be largely targeted at the automotive
deduction, the Court expressed the view
In addition, the following has been noted in sectors, black industrialists and
that the dispensation was not intended
respect of incentives: infrastructure grant support. Financial
to benefit contract miners. It is proposed
support to industrial parks is estimated
that the provisions dealing with allowable
• small businesses will receive a much to increase to support the refurbishment
mining capital expenditure be reviewed in
needed boost as Government gears of 27 industrial parks across South Africa
order to address concerns as to whether
incentives away from large business.
both the mining rights holder and the • in line with Government’s mandate,
Government has reinforced the
contract miner should qualify for the the Department of Tourism's (DoT)
commitment to reducing red tape for
accelerated capital expenditure deduction. focus will be on the transformation
small businesses to encourage growth
and job creation. In the medium
It is also proposed that the discretion and consequently job creation
term, the DoT plans to restructure
which the Minister of Finance, in
• R6.5 billion has been allocated for small the Tourism Transformation Fund to
consultation with the Minister of Mineral
business incentive programmes of which make funding more accessible. The
Resources and Energy, has to permit the
R2.2 billion will be transferred to the DoT has also set aside R856 million
deduction of capital expenditure incurred
Small Enterprise Development Agency for the implementation of 31-capacity
on one mine from taxable income derived
expected to be largely for loan funding building programmes and 15 incentives
on another mine be reviewed with the aim
and non-financial support. To encourage to transform the sector and to provide
of its removal or restructuring.
technology development and innovation, developmental support to rural tourism
Tax treatment of doubtful debts The Innovation Fund will be capitalised enterprises. The Working for Tourism
with R1.2 billion over the next three programme, through the Destination
The tax rules for determining the tax claim
years. A One-Stop platform for small Development programme is expected to
for doubtful debts by bank and non-bank
medium and micro enterprises will be increase its spending by R66 million, in
taxpayers were recently amended. These
established in order to improve access the medium term, in the hope of creating
rules take cognizance of whether the
to financial and non-financial support. approximately 16 000 new jobs
taxpayer applies IFRS 9 or not. Further
7Budget 2020/21 | Deloitte Commentary
• the agricultural sector is one of the Anti-avoidance rules for trusts address the uncertainty. In other words,
priority sectors in SA’s industrial clarity on the value of the adjustment will
Anti-avoidance measures were introduced
policy. A R4.8 billion allocation to the be legislated where partial payments are
in 2016 to curb the transfer of growth
comprehensive agricultural support made
assets to trusts using low interest or
programme will be made in the medium
interest-free loans, thereby avoiding estate • introducing measures to address undue
term in the Food Security, Land Reform
duty. These rules were subsequently VAT refunds on gold - schemes and
and Restitution programme. These funds
amended in 2017. It has come to the malpractice to claim undue VAT refunds
will be used to provide subsistence,
attention of government that certain have been detected in the value chain
smaller-holder and commercial farmers
taxpayers are undermining the adjusted relating to gold exports. It is proposed
with much needed infrastructure in
rules by subscribing for preference that appropriate regulations be
areas of grain, livestock and horticultural
shares in companies owned by trusts considered or legislation be amended to
production to facilitate growth.
that are connected to individuals. Further address this.
amendments will be proposed to the rules
Individuals
to prevent this new form of abuse. Export Taxes
Relief granted to individuals by the
VAT Government proposes the introduction
adjustment to the personal income tax
of export taxes on scrap metal which
brackets and increases in rebates amounts The following VAT related amendments
could replace the current price preference
to R14 billion (R12 billion is to adjust for were proposed:
system. The Budget Review states that
inflation with the balance of
the reform is intended to improve the
R2 billion being relief granted in excess of • electronic services - it is proposed that
availability of better quality scrap metal at
inflation). The tax-free threshold increases intermediaries be permitted to account
affordable prices for domestic foundries
from R79 000 to R83 100. In addition, for VAT on the payments basis
and mills. Consultation with the affected
an increase is proposed in the value of
• telecommunication services – it industries will begin immediately and will
medical tax credits from R310 to R319
is proposed that the definition of be concluded by the end of May 2020 for
per month for the first two beneficiaries,
telecommunication services be clarified consideration in the annual tax bills.
and from R209 to R215 per month for the
due to unintended consequences of the
remaining beneficiaries. The increase of Transfer duties
current definition
2.8% is in line with the announcement in
The brackets to calculate transfer duties
the 2018 Budget Review that the credit • corporate reorganisation rules - where
will be adjusted for inflation from 1 March
would be adjusted by less than inflation to the rollover relief provisions are used
2020. From 1 March 2020 no transfer
help fund the rollout of the National Health in part for corporate income tax, it is
duty will be payable on the purchase of
Insurance (NHI). proposed that this election should not
property with a value below R1 million.
lead to unintended VAT consequences.
Employer-provided bursaries
Therefore, section 8(25) (or 11(1)
Employer bursary schemes are currently (e)) will be amended to ensure these
being promoted which seek to reclassify transactions qualify for relief
ordinary remuneration as tax-exempt
• clarifying the VAT treatment of
bursaries granted to the dependents
irrecoverable debts - where a vendor
of an employee. Government proposes
hasn’t paid a supplier within 12 months it
amendments taking effect on 1 March
must reverse any input tax it previously
2020 to close this loophole.
deducted. There is uncertainty regarding
the value of supply rule that applies in
certain circumstances. It is proposed that
clarity be provided in the legislation to
8Budget 2020/21 | Deloitte Commentary
Taxation of heated tobacco products Tax administration the kind of information that may be
published and the manner of publication
Government will introduce a new category The legal framework and administration
or tariff subheading for heated tobacco of PAYE will be reviewed with a view to • SARS recently published draft diesel
products in the schedule of excise duties, implementing a more modern, automated refund rules and notes to the Customs
to be taxed with immediate effect at a rate process for employers that is easy to and Excise Act for public comment.
of 75% of the cigarette excise rate. understand, access and maintain. The The reform proposals and legislative
reforms are expected to reduce the framework will be refined further
Electronic cigarettes
administrative burden for employers, based on the outcome of stakeholder
Government plans to tax electronic cigarettes payroll administrators and SARS. engagement during 2020
in 2021 due to concerns about health effects.
In addition, the following tax administrative • the interest provisions of the Mineral
Excise duties on alcohol and tobacco initiatives were noted: and Petroleum Resources Royalty
(Administration) Act and that contained
Government will increase most excise
• Government will strengthen the Office of in the Tax Administration Acts will be
duties by an amount that matches
the Tax Ombud and separate it financially aligned
expected inflation of 4.4% for 2020/21, and
and operationally from SARS
by 6% in the case of sparkling wine and • SARS may currently issue an estimated
7.5% for pipe tobacco and cigars. • recognising the need for an independent assessment to a taxpayer who does not
office to oversee governance and file a return. It is proposed that SARS
Carbon tax
conduct within SARS, government will be permitted to also issue an estimated
The carbon tax rate will increase by 5.6% propose a SARS Inspector General assessment in cases where specific
for the 2020 calendar year. The carbon tax relevant material was requested from
• government proposes the correction of
rate will thus increase from R120 per tonne a taxpayer on more than one occasion,
an anomaly that currently exists within
of carbon dioxide equivalent to R127 per without an adequate response.
the PBO legislation which has the effect
tonne of carbon dioxide equivalent.
of not applying the sanction for non-
Purchase tax on motor vehicle compliance with the PBO legislation to all Tax policy reviews and research
emissions and incandescent global tax non-compliant PBOs
The draft Upstream Petroleum Resources
Vehicle emission tax will increase with • provisions will be proposed providing for Development Bill was recently published
effect from 1 April 2020 in line with global the refund of withholding tax on royalties for comment.
standards and shift to fuel-efficient cars. in cases where the underlying royalty
National Treasury will undertake or
Similarly, government proposes to increase becomes irrecoverable
complete the following projects during
the incandescent light bulb levy with effect • in view of the abuse of duty-free 2020/21:
from 1 April 2020 to encourage the uptake purchases by certain diplomats it is
of more energy-efficient light bulbs proposed that SARS be permitted to • examining regulation treatment of
Levies on plastic disclose information regarding duty- unlisted REITs
free purchases by diplomats to the
Government proposes to the raise plastic • reviewing the tax treatment of amounts
Director-General of the Department of
bag levy from 12 to 25 cents with effect received by portfolios of collective
International Relations and Cooperation
from 1 April 2020. A review of the current investment schemes
levy, including a clarification of the tax • it is proposed that the Customs and
treatment of compostable bags, will be Excise Act be amended to provide for the
undertaken. publication of tariff determinations and
rules prescribing the circumstances in
which such publication may take place,
9Budget 2020/21 | Deloitte Commentary
Exchange Control As regards individuals, whilst no mention
is made of changes to current investment
The Minister announced a proposed
limits applicable to individuals/natural
modernisation of the current foreign
persons, reference was made to transfers
exchange system which will be phased
in excess of R 10 million and this will come
in over the next twelve months. Going
with a more stringent verification process
forward, all transactions will be permissible
by SARS. It thus appears that there will be
except for a risk-based list of capital
no limits on individuals externalising funds
flow measures. While these measures
provided the necessary tax clearance
are mainly applicable to legal corporate
has been obtained. Natural person
entities there will also be exchange control
residents and natural person emigrants
reforms applicable to individuals.
will be treated identically and the current
The risk-based list of capital flow measures exchange control emigration concept
referred to above will include: will be phased out and be replaced by a
SARS verification process. This will also
• South African corporates will not be effect withdrawal of retirement funds on
allowed to shift their primary domicile, emigration and transferring dual listed
except under exceptional circumstances shares abroad.
and as approved by the Minister
• approval conditions for corporates with a
primary listing offshore will be aligned to
current foreign direct investment criteria
• cross-border transactions will still need
to be conducted via Authorised Dealers
• prudential limits on institutional
investors and banks remain
• the unhedged foreign currency exposure
for banks will remain limited to 10% of
liabilities
• the domestic treasury management
company policy will remain in place as
well as the international headquarter
company regime
• export of intellectual property for fair
value to non-related parties will not be
subject to approval
• the current policy pertaining to
loop structures will remain until tax
amendments are implemented to
address the risks.
10Budget 2020/21 | Deloitte Commentary
Contacts
For more information, contact your nearest Deloitte tax office.
Managing Director, Africa Tax & Legal
Delia Ndlovu, Tel: +27 (0)11 806 6185, Email: delndlovu@deloitte.co.za
Gauteng: Delia Ndlovu, Managing Director, Africa Tax & Legal
Tel: +27 (0)11 806 6185, Email: delndlovu@deloitte.co.za
KwaZulu-Natal: Mark Freer, Regional Leader, Africa Tax & Legal
Tel: +27 (0)31 560 7079, Email: mfreer@deloitte.co.za
Western Cape: Anthea Scholtz, Regional Leader, Africa Tax & Legal
Tel: +27 (0)21 427 5504, Email: ascholtz@deloitte.co.za
Editorial team
Hannah Marais
Tel: +27 (0)11 304 5463, Email: hmarais@deloitte.co.za
Moray Wilson
Tel: +27 (0)21 427 5515, Email: morwilson@deloitte.co.za
Ruben Johannes
Tel: +27 (0)21 427 5516, Email: rjohannes@deloitte.co.za
Facebook: http://www.facebook.com/deloittesa
Twitter: http://www.twitter.com/deloittesa
Blog: http://www.deloitteblog.co.za or http://blog.deloitte.co.za
Website: http://www.deloitte.co.za
Linkedin: http://www.linkedin.com/company/deloitte-south-africa/
1This guide is based on the Budget proposals tabled in Parliament by the Minister of Finance on 26 February 2020. These proposals are, however, subject to approval by Parliament. The information contained in this guide is for general guidance only and is not intended as a substitute for specific advice in considering the tax effects of particular transactions. While every care has been taken in the compilation of the information contained herein, no liability is accepted for the consequences of any inaccuracies contained in this guide. © 2020 Deloitte & Touche. All rights reserved. Member of Deloitte Touche Tohmatsu Limited
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