Chapter 3 (Lecture 4)
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Personal taxation
Company taxation
Capital gains tax
Other taxes
Double taxation
• South African taxation
What kinds of tax do we pay
o Air passenger tax
o Capital gains tax (CGT)
o Diamond export levy
o Donations tax
o Estate duty
o Excise duty
o Income tax
o Pay as you earn (PAYE)
o Provisional tax
o Retirement funds tax (RFT)
o Skills development levy (SDL)
o Stamp duty
o Transfer duty
o Uncertified securities tax
o Unemployment insurance fund
o Value Added Tax (VAT)
o Other taxes
VALUE ADDED TAX (VAT)
Value-Added Tax (VAT) is an indirect tax based on consumption of
goods and services in the economy.
Revenue is raised for the government by requiring certain traders
or vendors to register and to charge VAT on taxable supplies of
goods or services.
• VAT was introduced on 30 September 1991 at 10% and increased to
14% on 7 April 1993.
• The VAT system comprises of three types of supplies:
• Standard-rated supplies:
Supplies of goods and services subject to the 14% VAT rate in force
at the time of supply
• Exempt supplies:
Supplies of certain services not subject to VAT. For example
educational services provided in pre-primary, primary, secondary
and tertiary schools of a public character.
Also premiums on life policies and contributions to pension, provident,
retirement annuity and medical aid funds etc.
• The VAT system comprises of three types of supplies (continue..):
• Zero-rated supplies:
Supplies of certain goods or services subject to VAT at 0%. For
example brown bread, maize meal, rice, fresh vegetables,
fresh fruit, eggs and milk.
Also goods and services exported from the Republic of South
Africa.
1. The characteristics of VAT:
• The tax applies generally to transactions related to
goods and services
• It is proportional to the price charged for goods and
services
• It is charged at each stage of production and
distribution process
• The taxable person (vendor) may deduct the tax paid
during the preceding stages, that is the burden of the
tax is on the final consumer
2. VAT is only charged on taxable supplies made by a
vendor. Taxable supplies include supplies for which VAT
is charged at either the standard rate or zero rate, but does
not include:
• Salaries and wages;
• Hobbies or any private recreational pursuits (not conducted
in the form of a business);
• Occasional private sale of personal or domestic items;
• Exempt supplies
4. Who needs to register for VAT?
• Persons who make taxable supplies in excess of R1
million in any 12-month consecutive period (from 1
March 2009)
• A person may also register voluntarily provided that
the minimum threshold of R50 000 (from 1 March
2010) has been exceeded in the past 12-month
period
• Persons liable or voluntarily registered for VAT are
called “vendors”
In 2007 the Minister of Finance announced that
Secondary Tax on Companies (STC) would be replaced
by Dividends Tax (DT) with the effective date 1 April
2012.
The main objectives behind the change to DT:
 To align South Africa with the international norm where the recipient of
the dividend, not the company paying it, is liable for the tax relating to
the dividend
 To make South Africa a more attractive international investment
destination by eliminating a perception of a higher corporate tax rate
(STC is an additional corporate tax) coupled with lower accounting profits
(STC has/had to be accounted for in the income statement)
In simple terms, Dividends Tax (DT) is a tax imposed on
shareholders at a rate of 15% on receipt of dividends,
whereas Secondary Tax on Companies (STC) was a tax
imposed on companies (at a rate of 10%) on the declaration
of dividends.
The DT is categorised as a withholding tax, as the tax is
withheld and paid to SARS by the company paying the
dividend or by a regulated intermediary (i.e. a withholding
agent interposed between the company paying the dividend
and the beneficial owner), and not by the person liable for
the tax, i.e. the beneficial owner of the dividend.
Any company or any close corporation (CC) which
becomes liable for any normal tax or becomes liable to
submit any return of income in terms of section 66 of the
Income Tax Act No. 58 of 1962, (the Act) is required to
register as a taxpayer in terms of section 67 of the Act.
Any such person must register as a taxpayer at SARS
within 60 days after so becoming a taxpayer by
completing an IT77(C) form.
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Listed public companies
Unlisted public companies
Private Companies
Close Corporations
Co-operatives
Collective Investment
Schemes
Body Corporates
Share Block Companies
Dormant Companies
Public Benefit Companies
• Small business corporations
(Gross income for the year of
assessment does not exceed
R20 million (2013: R14
million)
• Micro businesses from 1
March 2009 with turnover
not exceeding R1 million per
year
• Companies tax rate for 2014/2015 remained
at 28%
• PLEASE USE THE RATES AS GIVEN IN MY
PRESENTATIONS ON EACH SUBJECT - FOR
FINANCIAL PERIOD ENDING 28/02/2015