ATC191204:Report of the Select Committee on Finance on the 2019 Taxation Administration Laws Amendment Bill [B19 - 2019] (National Assembly- section 75), dated 03 December 2019
Report of the Select Committee on Finance on the 2019 Taxation Administration Laws Amendment Bill [B19 - 2019] (National Assembly- section 75), dated 03 December 2019
The 2019 Taxation Administration Laws Amendment Bill (TALAB) was first published in the 2019 Budget Review, during the National Budget tabling. The Minister of Finance formally introduced the taxation Bills in Parliament on 30 October 2019 during the Medium Term Budget Policy Statement (MTBPS) tabling.
Section 77 of the Constitution requires all Money Bills to be considered in accordance with the procedure established by the Money Bills Amendment Procedure and Related Matters Act, 2009 (Money Bills Act). Section 11 of the Money Bills Act provides a procedure for passing revenue bills. It requires that the revenue raised be consistent with the fiscal framework; consider equity, efficiency, certainty and ease of collection; the composition of tax revenues; regional and international tax trends and the impact on development, investment, employment and economic growth.
2.Taxation Administration Laws Amendment Bill
The 2019 TALAB addresses the administrative tax amendments introduced by the Minister of Finance in October 2019. Its objective is to amend the Income Tax Act of 1962, the Customs and Excise Act of 1964, the Value Added Tax of 1991, the Skills Development of 1991, the Unemployment Insurance Contributions Act of 2002 and the Tax Administration Act of 2011.
The Income Tax Act of 1962 provides a time period for the validity of a declaration and a written undertaking in respect of withholding tax on interest and tax on royalties and removes a requirement to submit a declaration to a regulated intermediary in respect of tax free investments. In order to combat illicit financial flows, the Customs and Excise Act, of 1964 provides authorisation for the Commissioner to prescribe rules relating to the making of advance foreign currency payments. The Tax Administration Act of 2011 extends the notice period to institute legal proceedings against the Commissioner; provide for an administrative penalty for failure to report a common reporting standard mandatory disclosure rules and non-compliance penalties and completes the move from tax compliance certificate to tax compliance status.
3.The process followed by the Committee
The Committee’s work on the Bill was performed under unacceptable time constraints that require a review of how the Bill – indeed all taxation bills - are handled in the future. Revenue Bills, especially the TLAB, are technical in nature and require a thorough understanding of the potential impact of any proposed amendment on the fiscus and taxpayers.
To facilitate the legislative process of revenue Bills, the practice is for the Standing Committee on Finance (SCOF) and Select Committee on Finance (SeCOF) to receive joint briefings on the draft Bill and have joint public hearings prior to the tabling of the MTBPS. However, the SeCOF does not engage further with the draft Bill processed by the Standing Committee before the Bills are formally introduced. This is a result of the section 75 legislative procedure in accordance with which the Bill must be considered. Unless the SeCOF is also afforded a meaningful opportunity to consider the draft Bill prior to the tabling of the MTBPS, and to propose amendments to the Minister, the Select Committee would be, as it is now, at a disadvantage to propose any new amendments in terms of the Money Bills Act.
In terms of the Money Bills Act, the Minister must be afforded 14 days to comment on any proposed amendment. After this period, the Bill must still be considered by the National Assembly as a result of the section 75 procedure. Given the programme of Parliament at the end of the year when revenue Bills are considered, and within the present regulatory framework, it is difficult for the SeCOF to give due consideration to proposed amendments to revenue Bills.
The Committee will consider whether this matter should be addressed with amendments to the Money Bills Act, or whether there are other ways of addressing this challenge before the new budget cycle.
The Committee mandates the Chairperson to engage with the Standing Committee on Finance Chair to ensure that the Bill reaches the Select Committee at least two weeks before the MTBPS. This may mean that the informal Bill may have to be introduced earlier by National Treasury each year, and the Committee mandates the SeCOF Chair to also engage with National Treasury on this.
On 03 September 2019, the SeCOF held a joint briefing, with the SCOF by the National Treasury and the South African Revenue Service (SARS) on the 2019 taxation Bills, namely, TALAB, Taxation Laws Amendment Bill (TLAB) and the Rates and Monetary Amounts and Revenue Laws Amendment Bill.
On 19 September 2019, the SeCOF and SCOF held joint public hearings on the taxation Bills in Parliament. The Committees received submissions from nine stakeholders, namely, Business Unity South Africa (BUSA), Banking Association of South Africa (BASA), JA Transactions Solutions (JATS), Section 12J Fund Association, Kingston, PricewaterhouseCoopers (PwC), South African Institute of Chartered Accounts (SAICA), South African Institute of Tax (SAIT) professionals and Southern African Venture Capital and Private Equity Association (SAVCA).
On 26 November 2019, the National Council of Provinces (NCOP) formally referred the taxation Bills to the Select Committee on Finance for consideration and report.
The SeCOF received a second briefing on the taxation Bills by the National Treasury and SARS on 27 November 2019 but there were no submissions on TALAB.
The Select Committee on Finance, having considered and examined the Taxation Administration Laws Amendment Bill [B19 - 2019] (National Assembly – section 75), referred to it, and classified by the JTM as a section 75 Bill, accepts the Bill without amendments.
Report to be considered.
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