Finance Minister Pravin Gordhan has unveiled a sweeping plan to overhaul the governance and management of state-owned companies, which he said have been plagued by corruption, inefficiency and poor performance. The plan, which was announced in his medium-term budget policy statement on Wednesday, aims to restore the financial viability and strategic relevance of the entities, which collectively have more than R1 trillion in assets and employ over 300 000 people.
The Companies First Amendment and Second Amendment Bill were tabled in Parliament on the 28 August 2023, and have been published. [The initial draft of the Companies Amendment Bill was published in 2018, followed by a revised draft Bill in 2021, both of which have undergone extensive public consultation and engagement].
Progress reported in government and business partnership, with commitment to further accelerate key actions
The government and business leaders have announced the progress made in their partnership to address the most pressing challenges facing the country. The partnership, which was launched last year, aims to foster collaboration and innovation across sectors and regions, and to leverage the strengths and opportunities of both public and private actors. Some of the key achievements of the partnership include inter alia:
Ms Yanga Mputa has been appointed as the new Chief Director of Tax Policy at the Ministry of Finance. Ms Mputa has a wealth of experience in tax administration and policy, having served as a senior manager at the South African Revenue Service (SARS) and as a tax consultant at PwC. She holds a Master of Commerce degree in Taxation from the University of Cape Town and a Bachelor of Accounting Science degree from the University of South Africa.
Since the establishment of Operation Vulindlela in October 2020, government implemented structural reforms to stabilise South Africa’s energy supply, establish a competitive logistics network, reduce the cost and improve the quality of digital communications and reform the visa regime to enable businesses to attract the skills they need to grow, and to make it easier for tourists to experience a world-class African destination.
In South Africa, idiosyncratic factors continued to weigh on domestic financial sector resilience and overall economic growth prospects. The most notable country-specific vulnerability is the increasingly detrimental and widespread ramifications of an insufficient and unreliable electricity supply, while concerns over the deteriorating South African rail and port infrastructure networks also continue to grow.
The South African Reserve Bank (SARB) has introduced upgraded banknotes and coin into the South African market with effect from 4 May 2023. The denominations will be introduced incrementally. The upgraded banknotes and coin have enhanced security features and new designs; however, the broad themes for the upgraded banknotes remain the same as the current banknotes, while the theme for the coin is deep ecology.
In March the Monetary Policy Committee decided to increase the repurchase rate by 50 basis points to 7.75% per year, with effect from the 31st of March 2023. Three members of the Committee preferred the announced increase. Two members preferred a 25 basis points increase.
President Cyril Ramaphosa has signed into law the Employment Equity Amendment Bill of 2020. The Amendment Bill seeks to advance transformation of South Africa’s workforce by setting equity targets for economic sectors and geographical regions, and requiring enterprises to develop transformation plans.
As this year commences, high inflation and weak economic growth continue to shape global conditions. Russia’s war in the Ukraine drags on and recession risks remain elevated in the Euro Area, even though energy constraints have eased. Growth prospects for the United States this year are lower. The growth outlook for China has improved but is likely to remain modest by historical standards. In the developing world, a number of economies face debt distress, exacerbated by tighter global financial conditions.
The Minister of Finance, Mr Enoch Godongwana, will deliver the National Budget Speech on 22 February 2023. As usual, the budget allocation always aims to strike a balance between competing national spending priorities and limited resources.
Operation Vulindlela is a joint initiative of the Presidency and National Treasury to accelerate the implementation of structural reforms and support economic recovery. Operation Vulindlela aims to modernise and transform network industries, including electricity, water, transport and digital communications. The diagram below is a roadmap to governments reform and growth.
Two key Acts of Parliament, designed to strengthen South Africa’s system of Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT), have been signed into law. These laws will strengthen the fight against corruption, fraud and terrorism, and also assist South Africa in meeting the international standards on AML/CFT, and to reduce the prospect of greylisting by the Financial Action Task Force (FATF).
The Base Erosion Profit Shifting (BEPS) MLI has been published in Government Gazette 47559 of 25 November 2022. The overall goal of the BEPS MLI is to swiftly update the existing network of bilateral tax treaties to reduce opportunities for tax avoidance and base erosion by multinational enterprises. The BEPS MLI will be applied alongside existing tax treaties. South Africa currently has 79 bilateral tax treaties in force. In addition, a now defunct bilateral tax treaty with the United Kingdom was extended to Granada and Sierra Leone. 76 of these tax treaty countries have been listed by South Africa in the notifications and/or reservations to be covered by the BEPS MLI. These 76 tax treaties will, after all these countries have ratified the BEPS MLI, meet the tax related BEPS measures without the need to renegotiate these existing bilateral tax treaties.
High inflation and weak economic growth continue to shape global conditions alongside monetary and fiscal policy responses. Russia’s war in the Ukraine drags on, impairing trade and raising prices of a wide range of energy, food and other commodities. Growth in the United States is set to weaken, and remains low in China. Although energy constraints have eased somewhat in the Euro Area, recession risk is high. Additionally, a number of developing economies face debt distress, exacerbated by tighter global financial conditions.
The 2022 MTBPS presents a strategy to continue stabilising the public finances while supporting economic growth in a highly volatile global economy. Fiscal consolidation is achieving the objectives of the strategy originally outlined in the 2020 MTBPS. Lifted by better-than-expected revenues, the fiscal position is stronger. At the same time, increased funding for safety and security, fighting corruption and delivering infrastructure will support longer-term growth prospects.
“Democracy will have little
The fiscal position has improved since the 2022 Budget as a result of better-than-expected revenue collection. Government will use this revenue to increase spending in health, education and local government free basic services, infrastructure, and security and safety. At the same time, it will narrow the budget deficit, and address fiscal and economic risks posed by Denel, SANRAL and Transnet. Government remains committed to returning the public finances to a sustainable position.
The supportive global conditions that spurred the economic recovery in 2021 are dissipating, and domestic shocks – particularly power cuts – have lowered economic growth and confidence. A broad slowdown in global growth and high inflation are forecast. Rapid and decisive implementation of structural reforms, especially in the energy sector, supported by a clear and stable macroeconomic framework and improved state capability, remain crucial to improve the economy’s productive capacity and international competitiveness.
The Minister of Finance, Mr Enoch Godongwana, will table the Medium Term Budget Policy Statement in Parliament on Wednesday, 26 October 2022 at 14:00.
From 16 September 2022 SARS will no longer require you to submit the Supplementary Declaration for Companies or Close Corporations (IT14SD) when identified for a verification.
All companies (including external companies) and close corporations are required by law to file their annual returns with the Companies and Intellectual Property Commission (CIPC) on an annual basis, within a prescribed time period. The purpose for the lodging of such annual returns is to confirm whether a registered business is still in business/trading, or if it will be in business in the near future. Therefore, if annual returns are not filed within the prescribed time period, the assumption is that the business is inactive, and as such CIPC will start the deregistration process to remove the business from its active records. The legal effect of the deregistration process is that the juristic personality is withdrawn and the company or close corporation ceases to exist.
The 2022 Draft Revenue Laws Amendment Bill released on 29th July 2022 contains key amendments on retirement reform to move towards a “two-pot” retirement system. The amendments enable South Africans to also save for non-retirement purposes (e.g. emergencies) via their retirement funds, whilst preserving more of their savings for retirement. These amendments aim to encourage members to preserve their retirement savings by making it more flexible to accommodate unforeseen pressures that members face during the span of their working life. It makes it possible for workers not to resign from their employment merely to access their retirement funds and would have assisted members during a crisis like the COVID-19 pandemic, when many employees faced reduced salaries or were not paid at all during that time.
National Treasury and SARS published the 2022 Draft Tax Bills for public comment on the on the 29th July .