What is the most significant change to your region/jurisdiction's tax legislation in the past 12 months?
Increase in the Value Added Tax rate from 14% to 15% in South Africa.
Use of technology and analytics by Revenue Authorities to conduct tax audits.
Introduction of Health Promotion Levy (Sugar Tax) in South Africa.
What has been the most significant impact of that change?
The increase in the VAT rate from 14% to 15% in South Africa has had a significant disruptive impact on the retail and financial services industry in particular. The impact has been far reaching, as the number and scale of tax audits have increased as well as the number of tax disputes.
How do you anticipate that change impacting your work and the market moving forwards?
The increase in the VAT rate has given rise to significant consulting and advisory opportunities. Our tax dispute resolution teams have also scaled up as a consequence.
How has this changed the way you offer tax advice?
Automation of tax compliance and reporting has become a huge focus. Digitization of the tax function is now a core strategic initiative of most MNCs requiring depth and breadth of tax technology experience.
What potential other legislative changes are on the horizon that you think will have a big impact on your region/jurisdiction?
The shift from direct tax to indirect tax is prevalent beyond just VAT.
What are the potential outcomes that might occur if those changes are implemented?
The burden on tax payers is increasing-these are often hidden taxes such as fuel levies, customs duties, sugar tax including vat charge (as prices are quoted inclusive of these charges). We anticipate more detailed tax disclosure as MNC's in particular demonstrate their full effective tax burden.
Do you think that change will have a positive effect on both your practice and the wider regional/jurisdictional market?
Transparency and detailed disclosure should focus the minds of taxpayers that South Africa is a high tax jurisdiction.
How are issues surrounding the taxation of the digital economy affecting your jurisdiction?
Thus far, changes have been incorporated into the VAT Act with amendments to these changes proposed for 1 October 2018.
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