Our Finance minister, Tito Mboweni delivered a largely optimistic 2020 Budget Speech yesterday. The minister’s speech contained no radical tax changes. Tax rates for the coming year are set to remain largely the same (barring inflationary related adjustments).

In contrast to many of South Africa’s trading and investment partners, the South African corporate income tax rate of 28% has remained unchanged for more than a decade. In particular, the corporate income tax rate of the United States, the United Kingdom and India have recently been reduced to 21%, 19% and 22%, respectively.

The venture capital company (“VCC”) regime was introduced into the Income Tax Act No. 58 of 1962 more than a decade ago. The purpose of this regime is to raise equity funding in support of small businesses which would otherwise not have access to market funding.

The corporate reorganisation rules of the Income Tax Act No. 58 of 1962 (“the ITA”) provide for a “rollover” mechanism when, for example, assets are transferred from one group company to another. Provided the various requirements of the applicable provisions are adhered to, no capital gains tax, transfer duty or securities transfer tax (to the extent applicable) is triggered at the time of such transactions – rather the transferee is regarded as “stepping into the shoes” of the transferor in relation to the assets transferred.

Capital gains tax may be triggered upon the disposal of an asset by a taxpayer in circumstances where the proceeds or deemed proceeds arising from such disposal exceeds the base cost of the asset in the hands of the taxpayer.

The Carbon Tax Act came into force on 1 June 2019. The first tax returns and payments for effected tax payers will be due July 2020. This return would cover the period 1 June 2019 to 31 December 2019; subsequent periods will run from 1 January to 31 December. Form DA180 would need to be submitted in respect of each licensed emission generation facility.