6 Major 2022 Tax Updates in South Africa

6 Major 2022 Tax Updates in South Africa

In a tax sense, South Africa sure had an interesting run in 2022.

The 6 major 2022 tax highlights in South Africa gives hindsight, especially on notable tax occurrence including tax hikes, empowerment, the introduction of new taxes, and taxation of previously exempted sectors.

6 Major 2022 Tax Updates in South Africa

Without further ado, here are 6 major 2022 tax highlights in South Africa.

Takes on Tax Hikes

In 2022, the South African Government put a lot of energy into trying to improve the standard of living of its citizens and this is one of the major tax updates of the previous year.

A good example was when it increased tax in the country to fund the implementation of a Basic Income Grant (BIG), an initiative that was designed by South African president Cyril Ramaphosa, and Social Development Minister Lindiwe Zulu to mitigate poverty.

However, this decision didn’t sit well with taxpayers who would be the ones to pay higher tax rates to help fund this initiative.

According to a study from Intellidex, most of the proposals for a basic income grant would require raising between R50 billion and R100 billion a year.

The research and consulting firm explained that depending on tax revenue to fund this initiative is not a great idea, especially when taxpayers are already finding it hard to pay their taxes 

It cautioned that the government needs to tread carefully so that the entire project doesn’t end up having the opposite effect of its intended goal.

It then stressed that this plan should not be executed at the expense of the country’s financial stability and economic growth.

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Tax Incentives

Another notable tax event in 2022 was when the presidency through a special tax scheme pitched businesses to create more jobs with the benefit of getting tax cuts and waivers as perks for reducing unemployment rates in the country.

Last year, the presidency of South Africa led by President Cyril Ramaphosa launched a digital platform; SAYouth.mobi where teeming youths in the country can get information about openings from different employers of labor.

The platform came to be on the heels of the government’s Youth Employment Programme which is aimed at providing the average youth with quality work experience through training that addresses societal gaps.

As of 2022, the SAYouth.mobi platform had 2.9 million young people registered, with plans by the presidency to graduate 245,000 young people by the end of August, joining the ranks of approximately 600,000 young South Africans that have participated in the scheme since its launch in 2020.

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Tyre Tax

Third on our list of 6 Major 2022 Tax Updates in South Africa dives into another decision of the government that received pushback when it addressed the complaint from the SA Tyre Manufacturers Conference to the International Trade Administration Commission regarding the low prices of tires imported from China and the negative impact it is having on the local tire manufacturing industry.

Following receipt of the complaint, the government announced an additional 38.33% excise duty on top of the existing excise duties of between 25% and 30%, which then increased the excise loading of imported tires to between 63.33% and 68.33%.

However, the Automobile Association kicked against this increase arguing that many consumers, who are already dealing with inflation, will choose to continue using tires that are in a bad condition because they cannot afford new tires.

The conversation quickly became a matter of safety as the association pointed out the dangerous decisions that transporters would have to make in the name of cutting costs.

The association also argued that this will make the country’s roads even more dangerous as the chances of accidents happening will increase significantly.

It was revealed that in 2021, about 12,541 people lost their lives on South Africa’s roads as a result of human error, environmental conditions, and vehicle factors such as bursting or smooth tires, poor brakes, and faulty headlights contributed.

The association then reiterated its agreement with organizations such as TIASA that the ruling to add the extra excise duties needed to be reversed.

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Heavy Pension Deduction

Another one of the 6 major 2022 tax highlights in South Africa was when members of the Government Employment Pensions Fund (GEPF) lashed out at the South African Revenue Service (SARS) for imposing a heavy tax that led to them receiving a reduced pension for October.

While SARS defended its actions by stating that before the deduction, it had explained in detail why it had to happen, GEPF claimed that the communication wasn’t clear enough.

Back in December 2021, SARS said that a recently introduced legislation made provision for it to find out the effective rate of tax in regards to the combined employment and/or pension sources of income of a taxpayer, and then give that rate to the retirement fund administrators to withhold PAYE.

Even though SARS spokesperson Siphithi Sibeko took his time to explain that pensioners can choose to opt out of this deduction, a GEPF spokesperson Matau Molapo still maintained that the communication was ambiguous.

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Remote Workers Taxation

Following the aftermath of the Covid-19 pandemic, remote working has become increasingly popular and it has invited different tax implications for both employees and employers.

This is why back in 2022, there was a discussion regarding tax for remote workers in South Africa.

According to Jenny Klein and Megan Stuart-Steer, legal associates for ENSafrica, tax consequences vary depending on whether employees work in South Africa for a foreign employer or abroad for a South African employer.

It was further explained that in a situation where remuneration is paid to an employee by different employers in different jurisdictions, and those jurisdictions require the withholding of employees’ tax, this would lead to a dual withholding obligation for the employer and would mean a loss for the employee.

In the end, it is pertinent to note that Tax For Remote Workers In South Africa is novel to tax administration in the country as income tax is tied to residency but South Africa must now in the face of paucity of funds, look for innovative ways to capture the remote workspace in the tax net.

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Forex Tax

To round off this list of 6 Major 2022 Tax Updates in South Africa, recall that Africataxreview.com did a piece on the taxation of forex trading in South Africa.

Understanding Forex tax in South Africa is critical as the South African Rand (ZAR) is one of the top 20 most traded currencies in the world with an annual trading volume of almost USD 70 billion in 2016.

Forex trading involves speculating on the rise and fall of currencies to make a profit. South Africans can legally trade in the foreign exchange market via any FSCA-regulated forex broker authorized for offering Derivative instruments to traders in South Africa.

Many South Africans don’t have sufficient knowledge regarding their tax obligations if they exchange foreign currencies.

One of the many misconceptions when it comes to taxation in Forex trading is that many investors think that their offshore trading accounts give them tax-free gains.

In reality, income attained in an offshore trading account by residents is liable to normal taxable treatment and is expected to be reported in South African Rand.

When declaring one’s Forex income, one’s currency gains or losses would be documented under “foreign revenue” or “business/trading,” depending on the context.

To summarize understanding forex tax in South Africa, the profit gotten from Forex trading is just as liable to taxation as any other income generated by South Africans.

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Concluding remarks

There you go, now you are aware of 6 major 2022 tax highlights in South Africa.

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