The National Treasury briefed the members on the proposed amendments to the Revenue Laws Bill. The most important objectives of these amendments are general business tax stimulus, small business tax stimulus, grants to organs of state and public benefit organisations, encouraging capital inflows and discouraging outflows, the removal of outdated tax preferences and the targeting of anti-avoidance measures.
Mr M Grote and Prof Engel represented the Treasury. SARS was represented by Mr K Louw, Mr F Tomasek and Mr Frank (Head: Indirect Taxes).
Mr Grote reviewed the major incentives and announcements that had been made by the Minister of Finance in his Budget Speech in February. The focus this year is on a bolder rollout of microeconomic reforms and they believed they had captured them very adequately under the term business tax stimuli. This entailed the urban development zone which they expanded on in their presentation (see document).
Ms Joemat (ANC) mentioned the example of paint companies approaching schools to paint them. They had received tax incentives for this formerly. With the exclusion of services in this bill, does this mean that they also will not be able to make use of this incentive?
Prof Engel explained that it is your own service that is excluded, not the cost of the service.
Mr Mnguni (ANC) asked how much revenue will be forfeited through all these tax concessions.
Prof Engel replied that they are talking of a figure of around R80 million which is not a lot in government terms.
Ms Joemat expressed her concern over the capacity of SARS to monitor all the criteria that are being put in place.
Mr Tomasek replied that what they had tried to do with the design of the various incentives is piggyback them as much as possible on existing issues. Where that was not possible they tried to get assistance from other parties such as municipalities and the Department of Minerals and Energy (for mining rehabilitation).
Ms Mahlangu (ANC) asked about the regulations and incentives that they are proposing for small businesses. Is it in response to the outcry that there is too much regulation for small business or is this a totally unrelated issue as to the ongoing debate?
Mr Grote explained that the incentives for small business are a real concern. There is disparity between the incentives for big corporations and small and medium enterprises (SMEs). The new policy feeds into the Department of Trade and Industry policy that has major incentives for SMEs.
Ms Mahlangu reiterated that many small and micro businesses are struggling because there is not a proper regulatory environment for them to prosper.
Presentation by the Department of Defence
The Department was represented by Brigadier-General de Wet and Colonel Zobane. They explained to the Committee why there is an amendment to provide for an equitable tax dispensation for former Non-Statutory Force members and other civil servants (see document).
There was no discussion.
Explanatory Memorandum: Revenue Laws Amendment Bill
Mr Grote, Prof Engel and Mr Tomasek went through the draft Bill clause by clause to explain to the committee what amendments are being proposed and the reasoning behind those changes as set out in the Explanatory Memorandum.
The meeting was adjourned.