South Africa has proposed the removal of the 183-day foreign-earned income exemption in certain situations. Those certain situations, it seems, are when an expat resides in a jurisdiction with very low or non-existent taxes, which means they could be getting away with being doubly non-taxed. But the proposal has led to inevitable concerns that expats will end up being doubly taxed instead.
The Government argues that the foreign income exemption was put in place at a time when South Africa had far fewer double tax avoidance treaties than it does today. It assures those taxpayers likely to be affected by the new rule – if introduced – that tax credits will be available to prevent situations of double taxation arising. Although I imagine applying for a foreign tax credit is unlikely to be a comforting prospect for those who currently don’t need to. What’s … Read More »
With regard to international trade, it’s currently rather a bad time for supporters of free trade. According to a recent World Trade Organization (WTO) report, between mid-October 2015 and mid-May 2016, G20 nations applied 145 new trade-restrictive measures, or an average of almost 21 new measures a month, up from 17 in the preceding period. This is the highest monthly average of new trade restrictive measures registered since the WTO began its monitoring exercise in 2009. In addition, G20 states initiated 96 anti-dumping investigations in the most recent period for which data is available (June-December 2015), while 80 were initiated during the previous six months.
Nevertheless, there have still been some glimmers of hope for free traders recently. One of them was confirmation by the South African Department of Trade and Industry that tariff-free access to the United States market … Read More »
In South Africa it’s only a month since the Government finally enacted legislation giving effect to measures announced in the 2015 Budget, and already the 2016 Budget announcement has come and gone. Often, when trying to track the progress of a particular tax announcement, you might find that that the initial budget legislation has been split into two or more separate bills, some of which might have been put out to consultation, others fast-tracked through the assembly, or shunted into the siding for consideration at some ill-defined later date. The South African law-making progress feels a bit like this sometimes. However, it’s not the finer points of parliamentary procedure in South Africa that bear close examination here, but the 2016 Budget itself. It raises taxes, by about the equivalent of USD3.25bn over the next three years, and doesn’t cut appear … Read More »
Clearly, no single nation is going to tackle climate change alone. Which is why heads of state from around the world met ahead of the Paris climate talks last month to urge countries and companies to put a price on carbon. However, pricing carbon sounds fine in principle, but how do you do it in practice? Different countries have chosen different ways to go about this, from straight taxes on carbon emissions to more complex market-based mechanisms. And nobody really knows yet what the optimum carbon pricing system should look like, including me, because there just isn’t enough data to assess the various schemes. But I’m going to stick my neck out and say that the ideal system won’t look like South Africa’s proposed carbon tax, the draft legislation for which I had the pleasure of reading the other day … Read More »
It is to South Africa I turn to next. In 2013, the Government set up a committee of tax experts to review the country’s tax system. The overarching aim of this exercise is — in the words of the Government — to “assess our tax policy framework and its role in supporting the objectives of inclusive growth, employment, development, and fiscal sustainability.” It’s a sentence that could have been lifted word-for-word from an OECD report on tax-to-GDP ratios. But it’s actually fairly easy to translate this official-speak: for phrases like “inclusive growth” and “fiscal sustainability,” read “more spending and more tax.” Being the cynic that I am, I suspect that the Government probably set up the Davis Tax Committee, as it has come to be known, in the hope that its conclusions would help to justify its argument for certain … Read More »
It was no surprise when South Africa’s Minister of Finance, Nhlanhla Nene, announced an increase in personal income tax in the 2015 Budget. But it could have been a lot worse. Many observers had predicted that the Government would increase value-added tax, or even corporate tax, to address a budget deficit that is threatening to become structural. Doubtless the devil will be in the detail. And the phrase “the Government is to take further steps to combat revenue leakages through erosion of the tax base, profit shifting, and illicit money flows” shows that beneath the more eye-catching measures to help small businesses, a series of complex revenue raisers lurk that will keep the midnight oil burning in many a corporate tax department. There’s no getting away from the fact, though, that the Government needs revenue and the Budget therefore raises … Read More »