ATC231201: Report of the Select Committee on Finance on the 2023 Tax Administration Laws Amendment Bill [B37 - 2023] (National Assembly- section 75), dated 01 December 2023

NCOP Finance

Report of the Select Committee on Finance on the 2023 Tax Administration Laws Amendment Bill [B37 - 2023] (National Assembly- section 75), dated 01 December 2023

1.Introduction and background

The 2023 Tax Administration Laws Amendment Bill (TALAB) was formally tabled in Parliament on 01 November 2023. The Committee received a briefing from the National Treasury (NT) and the South African Revenue Service (SARS) on 21 November 2023. Despite calling for public comments, the Committee received no submissions on the 2023 TALAB. The Committee held a meeting on 01 December 2023 to consider the TALAB clause-by-clause and adopt the report.

2.Overview of the proposed amendments in the draft 2023 TALAB

The objective of the 2023 TALAB is to amend the Income Tax Act (ITA), 1962, the Customs and Excise Act (CEA), 1964, the Value-Added Tax (VAT) Act, 1999, the Mineral and Petroleum Resources Royalty (Administration) Act, 2008, and the Tax Administration Act (TAA), 2011.

3.Summary of proposed amendments in the 2023 TALAB

The 2023 TALAB proposes to amend the abovementioned Acts to:

Align with anti-money laundering and combatting terrorism developments: The proposed amendments provide for similar grounds for disqualification of office bearers in tax-exempt body corporates and similar bodies, Public Benefit Organisations (PBOs), recreational clubs, associations, and small business funding entities.
Introduce the enabling framework for the Advanced Pricing Agreement (APA) Programme in line with international trends. SARS expects the APA programme to commence with a pilot shortly after the legislative framework has been put in place.
Adjust the employees’ tax registration requirement for non-resident employers: The proposed amendment removes the distinction between resident and non-resident employers, such that non-resident employers will become obliged to deduct Pay-as-you-earn (PAYE) and aligns with the existing requirements to register for skills development levies and unemployment insurance contributions.
Vary employees’ tax withholding in respect of remuneration: Under the current wording of paragraphs 9 and 10 of the Fourth Schedule, the foreign taxes paid in respect of section 8C gains cannot be considered for purposes of determining the PAYE due on the gain. This could result in cash flow implications for the affected employees. The proposed amendments aim to rectify this situation.
Provide a single window for Advance Passenger Information (API) and Passenger Name Record (PNR) data: The amendment aims to exempt an operator of a conveyance from the obligation to transmit the relevant information to the Commissioner if the operator has submitted it to Department of Home Affairs (DHA) which has, in terms of an agreement between SARS and DHA, shared such information with SARS.
Enable SARS’ new online traveller management system: The proposed amendments make provision for travellers to submit traveller declarations in accordance with requirements determined by the Commissioner by rule; clarify that foreign and local currency, more than a threshold prescribed, must be declared; and grant the Commissioner an authority to make rules concerning various aspects relating to the traveller declaration.
Enable the Commissioner to prescribe conditions under which deferment of duties will be allowed by rule.
Provide for the liquidation of provisional payments that serve as security: The proposed amendment provides for the Commissioner to make rules to further enhance SARS’ current processes and procedures relating to the liquidation of provisional payments.
Insert the definition of “beneficial owner” of a company, trust, and partnership in the Act to align with the General Laws Amendment Act (GLAA) and the National Strategy on Anti Money Laundering.
Expand the general disclosure provisions for section 18A-approved organisations: The proposed amendments explicitly empower SARS to disclose all entities with a section 18A approval.
Disclose taxpayer information to certain entities to allow verification of beneficial ownership information: The proposed amendment allows the disclosure of taxpayer information, like disclosures to the South African Reserve Bank (SARB), Financial Intelligence Centre (FIC) and Financial Sector Conduct Authority (FSCA), to the Companies and Intellectual Property Commission (CIPC); the Master of the High Court; and the Non-Profit Organisation (NPO) Directorate.
Extend the period to submit a return where taxpayers disagree with an auto-assessment: The proposed amendment empowers the Commissioner to extend the period within which the taxpayer is required to make their request to SARS by public notice. This will allow the deadline for the request to be aligned with the close of the filing season for non-provisional taxpayers.

4.Committee observations and recommendations

4.1The Committee welcomes the APA programme, as it would provide taxpayers with a greater level of certainty when embarking on large-scale international transactions that had transfer pricing implications. The Committee urges the SARS to finalise the pilot programme within the specified timeframes and share the outcome with the Committee.

4.2The Committee welcomes the proposed amendment to remove the distinction between resident employers and non-resident employers conducting business through a permanent establishment in South Africa. The Committee recommends that SARS should monitor that the proposed amendments achieve the intended objectives.

The Select Committee on Finance, having considered and examined the Tax Administration Laws Amendment Bill [B37 - 2023] (National Assembly – section 75), referred to it, and classified by the JTM as a section 75 Bill, accepts the Bill.

Democratic Alliance reserved its position.

Report to be considered.

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