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How to assess the impact e-tolling will have on your organisation

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Gauteng road tolling is a certainty, organisational preparedness is not

The numerous benefits of Gauteng Road Tolling will no doubt be realised with an associated cost in that individuals and business will soon start to feel the impact of this cash outflow. In short, Gauteng road tolling is expected to place a significant financial burden on both organisations and individuals.

In a Deloitte Remuneration survey 63% of participant organisations stated that they are still to investigate the impact this will have on their employees and whether they will compensate employees for this cost. Furthermore, based on our ongoing client interactions in the market, we are also aware that several organisations have not yet assessed the impact further tolls could have on their distribution network and operating margins.

Without having visibility of this impact, numerous organisations have not yet decided what proportion of costs will be absorbed through their operating margin, what costs will be passed on to customers and what proportion of costs will be accepted from their suppliers.

Organisations need to assess how the business will be impacted by E-Tolling and craft strategies to minimise the negative effects on profitability and employee productivity

Road tax represents a significant change for both the organisation and employee. Understanding the quantitative and qualitative impact of this road tax on your organisation will ensure you are prepared to design and implement appropriate mitigating actions for both internal and external stakeholders.

Organisations need to identify . . . . Click here to download the article

For a more detailed discussion on e-tolling, how it will affect your business and how you can prepare for the impact of e-tolling, contact Chad Schaefer at chschaefer@deloitte.co.za or Clinton Houston at clhouston@deloitte.co.za

 

An innovative approach to leadership talent strategy and sustained future success

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Businesses today operate under unprecedented conditions of competition and turbulence, making it increasingly difficult to attract and retain talented employees and fill scarce-skills positions.

In a recent article by SAICA (2013: Moneyweb), the chief executive officer of SAICA, Matsobane Matlwa, says, “Companies trying to survive and thrive have turned to the advanced financial management skills of CAs(SA) to steer them through the toughest economic times of our generation.

In troubled times is not just about controls, tax or ratios – though these are important – it is about grasping and managing risks and strategic opportunity. This is why CAs(SA) also dominate the chief executive function in South Africa with three out of ten (29.7%) listed company leaders also having achieved the CA (SA) qualification.”

Critical CA leadership talent is becoming increasingly scarce in South Africa due to this appreciation of the abilities of CAs and the resultant demand exceeding supply, growing skills shortage in the profession (continuous shortage of 5 000 CAs as far back as 2008). The laws of economics dictate that a high demand and shortage of supply of top talent should lead to a highly competitive market for CA talent.

For your organisation to thrive, it is important to be ahead of the game in terms of attracting the best chartered accountants in the country.

Download the full article . . . .  An innovative approach to leadership talent strategy and sustained future success

If you require a more detailed discussion around your organisation’s leadership talent strategy, feel free to contact Anneke Andrews at anandrews@deloitte.co.za

We welcome you to join the Deloitte South Africa – Audit group on LinkedIn to post comment and interact with your peers

Tax and investment information relating to thirty key countries in Africa

Tax information 30 African countriesThis booklet contains a summary of tax and investment information relating to thirty African countries which include Algeria, Angola, Benin, Botswana, Burundi, Cameroon, Democratic Republic of Congo (DRC), Ethiopia, Equatorial Guinea, Gabon, Ghana, Ivory Coast, Kenya, Lesotho, Malawi, Mauritius, Morocco, Mozambique, Namibia, Nigeria, Republic of Congo (Brazzaville), Rwanda, Senegal, South Africa, Swaziland, Tanzania, Tunisia, Uganda, Zambia and Zimbabwe.

Details of each country’s income tax, VAT (or sales tax) and other significant taxes are set out in the publication. In addition, investment incentives available, exchange control regimes applicable (if any) and certain other basic economic statistics are detailed.

The contact details for each country are provided on the cover page of each country chapter/section and are also summarised on page 6, Tax Leaders in Africa. An introduction to the Africa Tax Desk (including relevant contact details) is provided on page 5, Africa Tax Desk.

This booklet has been prepared by the Tax Division of Deloitte. Its production was made possible through the efforts of:

  • Moray Wilson and Adrienne Snyman – editorial management and content
  • Bruno Messerschmitt, Musa Manyathi, Moray Wilson and Sarah Naiyeju – Deloitte Africa Tax Desk
  • Deloitte representatives in various cities/offices in Africa and elsewhere, and other professionals from non-member firms (namely; Lesotho, as well as, Rwanda, Burundi and the DRC)

Unless otherwise indicated, the fiscal information is current as at 31 December 2012. The economic statistics have been obtained from the best information available during 2012.

Download the booklet . . . . Tax and investment information relating to thirty key countries in Africa

Enquiries may be directed to morwilson@deloitte.co.za of the Deloitte Africa Tax Desk

Using Integrated Reporting to tell the story of long term value creation to stakeholders

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The International Integrated Reporting Council (IIRC) published a Consultation Draft of the Integrated Reporting Framework (Framework) for public comment on 16 April 2013. This Framework was developed based on the comments received by the IIRC on the 2011 Discussion Paper “Towards Integrated Reporting – Communicating Value in the 21st Century” and constitutes the next step in the process to issue the International Integrated Reporting Framework later in 2013.

For a more detailed discussion on Integrated Reporting and how Deloitte can assist your organisation in the creation of the Integrated Report, feel free to contact Nina le Riche at nleriche@deloitte.co.za or Dr Johan Erasmus at jerasmus@deloitte.co.za

The Framework is to be welcomed as it presents a much clearer picture of the required approach, considerations, inputs and disclosures to generate an effective and meaningful Integrated Report. Although the Framework is based on the Discussion Paper, it encompasses both a refinement and elaboration of the applicable concepts and principles which inform and underlie Integrated Reporting (IR) and the Integrated Report, as well as the various content elements which should be addressed in the Integrated Report.

The Framework makes it clear that a principle based approach should be followed in the preparation of the Integrated Report. Rather than to provide a list of detailed disclosures, the Framework sets the scene and provides the underlying principles and considerations that should guide the approach to IR and the publication of the Integrated Report.

In essence, the Framework proposes that the company should explain to its stakeholders how it creates and sustains value in the short, medium and long term. The explanation should adhere to the fundamental concepts and guiding principles in describing the business model used to create value. In doing so, the company should discuss and link all content elements. This should all be underpinned by the strategic objectives of the business.

Download the full article . . . .  Telling the story of long term value creation

For a more detailed discussion on Integrated Reporting and how Deloitte can assist your organisation in the creation of the Integrated Report, feel free to contact Nina le Riche at nleriche@deloitte.co.za or Dr Johan Erasmus at jerasmus@deloitte.co.za

 

Budget 2013/14, Consolidated Commentary

Budget 2013 Infographic

The Deloitte Budget 2013/14 infographic represents themes that were highlighted in the 2013/14 Budget Speech. click here to download the full Consolidated Commentary Guide, or read the summary below:

Exchange Control

The Minister of Finance made some significant announcements on these issues in his 2013/14 speech, including proposed measures to relax cross-border regulations on companies, banks and other financial institutions to invest and operate in other countries.key exchange control issues, the ‘Gateway to Africa’ reforms.

Personal Income Tax

Individuals will enjoy Personal Income Tax relief amounting to R7 billion by way of adjustments to the Personal Income Tax brackets, tax rebates and medical fees tax credit (see tax tables in Deloitte Quick Tax Guide – 2013/14).

Grants and Incentives

The objective of this year’s Budget remains the focus on transformation of the economy and promoting industrial development, investment, competitiveness and employment creation. In the past specific incentives were created to provide assistance to industries to reach our medium terms goals. The announcement of a Carbon Tax in this year’s Budget Speech makes it less clear on how government aims to promote industrial development and the overall competitiveness of the South African economy.

Carbon Tax and Energy

The announcement of a Carbon Tax in this year’s budget speech makes it less clear on how government aims to promote industrial development and the overall competitiveness of the South African economy. The effect of the introduction of Carbon Tax will, in our opinion, be severe and, although only to be introduced from 2015, companies will have to start considering Carbon Tax seriously in their budgeting processes.

International Tax

  • Further easing of cross-border anomalies
  • Gateway subsidiary for treasury purposes
  • Streamlining currency taxation
  • Reforming the taxation of trusts
  • Deferral of expenditure incurred by certain connected persons
  • Controlled foreign company activities
  • Removal of source focus for initial copyright authors
  • Uniform cross-border withholding to prevent base erosion

Company Tax

  • Relief for small businesses corporations and social-impact firms
  • Restrictions on the deductibility of debt
  • General interest cap on connected party debt
  • Interest cap on corporate acquisitions and restructures
  • Share cross-issues to be revised
  • Proposals applicable to financial institutions

Customs Duties and Excise Duties

  • Specific Excise Duties (“sin taxes”)
  • Fuel Taxes
  • Advalorem Excise Duties
  • General Customs and Excise matters

Value-Added Tax (VAT)

  • VAT registration of foreign businesses
  • Streamlining registration and filing for businesses and individuals
  • Miscellaneous amendments
    • Motor cars
    • Repossession of goods
    • Future supply of services
    • In-flight entertainment
    • Supplies between connected persons
    • Tax invoices issued in foreign currency
    • Temporary letting of residential fixed property
    • Conversion of share block scheme to a sectional title
    • Home-owners association
    • The right of use of fixed property
    • Indirect exports
    • Imported goods – damaged or destroyed
    • Pooling arrangements
    • Square Kilometre Array
    • Research projects to be undertaken by National Treasury in respect of VAT

Administrative Issues and Other Taxes

  • Aggressive tax planning, base erosion and profit shifting
  • Taxation of Trusts
  • Understatement penalties
  • Streamlining registration and filing
  • Tenders and tax compliance
  • Gambling tax
  • Tax policy research projects

Five years of uncertainty around dividends withholding tax laid to rest

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Five years of uncertainty and discussion around the introduction of dividends withholding tax have at last been laid to rest, says Deloitte.

Legislation that took effect on 01 April 2012 specifies a dividend withholding tax (DWT) rate of 15%, which is, however, subject to applicable domestic exemptions or tax treaties,” says Musa Manyathi, Associate Director in Taxation Services at Deloitte.

“The introduction of DWT marked the end of Secondary Tax on Companies (“STC”), which, until now, had been part of our tax regime for nearly 20 years – although it had never quite been understood by our major international trading partners. This ultimately was the fatal blow delivered to its existence.”

“DWT as an alternative tax ensures South Africa’s alignment with the international trend on the taxation of dividends. It therefore encourages much-needed foreign investment, and should have the benefit of compensating the fiscus for revenues lost as a result of the abolition of STC.”

“Whilst STC was a tax borne by the company declaring the dividend, DWT, in line with the rest of the world, is borne by the shareholder provided that the dividend is a cash dividend,” says Manyathi. “Although the DWT legislation is only eight months old, it has already undergone significant changes,” notes Manyathi.

Download the full article . . . .  Five years of uncertainty around dividends withholding tax has been laid to rest

For a more detailed discussion around dividends withholding tax, contact Musa Manyathi (Associate Director in Deloitte Taxation Services) at mmanyathi@deloitte.co.za

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Alex Gwala of Deloitte says rent resource legislation for mines could follow the ANC conference

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Decisions made during the ANC Mangaung conference saw the discussions and speculations around the proposed state intervention in the mining sector being put to bed. These decisions will now influence the February 2013 Budget speech, says Deloitte.

“Based on what has been agreed by the ANC,” says Alex Gwala: Associate Director, Mining Tax at Deloitte, “an announcement by the Minister of Finance, Pravin Gordhan, about the possible introduction of some proposed interventions, can be expected.”

In his ANC address in January 2013 President Zuma stated clearly that ‘the State must capture an equitable share of mineral resources rents through the tax system’. This is indeed the confirmation that the State is going to be introducing new additional forms of taxes for the mining industry.

Even though he did not spell out the types of taxes that will be introduced, we know from the SIMS document that was published early last year that there was a proposal to introduce the Rent Resource Tax (RRT), which is similar to the Mining Rent Resource Tax (MRRT) that was introduced in Australia in 2012.

In terms of the MRRT, a mining company in Australia will only have to pay tax of 30% when its annual profits reach $75 million (or R650 250 000). “The RRT in South Africa could be triggered once an investor has made reasonable returns. However, what is regarded as a reasonable return will ultimately be defined by National Treasury, although it has been suggested that the level of return will be approximately 15%.

It appears from the current proposals, that the RRT will be calculated on the surplus after taking into account direct mining costs and a reasonable return, but before indirect costs,” he says.

Download the full article . . . . Rent Resource legislation for mines could follow ANC conference

For a more detailed discussion, contact Alex Gwala (Corporate Tax Specialist at Deloitte Southern Africa) at agwala@deloitte.co.za

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Deloitte urges the Minister to give the property development sector clarity on tax positions

Centre Point tower Tottenham Court Road London

The 2013/2014 budget speech will present an ideal opportunity for SARS to provide the property development sector with clarity on several of their tax concerns and, in so doing, provide adequate incentives to help expand the nation’s infrastructure and create employment, says Deloitte.

Izél Du Plessis, Deloitte Tax Director and Regional Tax Leader for Pretoria, says that “although taxpayers who own new and unused commercial buildings are permitted to deduct capital allowances on these buildings from their taxable income, there have recently been two occasions where confusion regarding this principle has arisen.”

“The first example of confusion occurring involved ownership of a building transferred within a group of companies. Section 45, one of the corporate rules of the Income Tax Act, provides for tax roll-over relief to be provided where assets are sold from one group company to another,” says Du Plessis.

“Section 45 states that the new owner will “step into the shoes” of the previous owner as if the building has always belonged to it. To qualify for the relief provided in terms of this section it is required that, if the building constitutes an allowance asset (a capital asset on which tax allowances are claimed), for the seller, it must also be acquired as an allowance asset by the purchaser.

Download the full article . . . . Give the property development sector clarity on tax positions and create employment Deloitte urges the Minister

For a more detailed discussion on the contents of this article, contact Izél Du Plessis (Director – Tax at Deloitte & Touche) at iduplessis@deloitte.co.za

We invite you to subscribe to the Deloitte newsletter where we send targeted weekly introductions to Deloitte thought ware and invitations to participate in Deloitte surveys and attend Deloitte events.

 

Ashleigh Theophanides of Deloitte talks about uncertainty regarding funding of National Health Insurance

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The 2013 national budget to be tabled in February could provide an opportunity for Government to address the uncertainty surrounding funding of the proposed National Health Insurance plan, especially as expectations had been raised that about R225 billion will be required for the scheme by 2025, says Deloitte.

“During the last three years health expenditure has grown, increasing from R77.3 billion in 2008/09 to R113.2 billion in 2011/12. It is expected that this figure will grow, reaching R140 billion over the next three years. However, the 2012 budget allocation for healthcare was R121 billion, marginally below estimates of R121.5 billion, demonstrating what seems to be an under-provision for health,” says Ashleigh Theophanides, Director and Healthcare Actuary at Deloitte.

“This present under-provision should be seen in the context of Green Paper estimates that the NHI will cost R255 billion by 2025. This appears to be a considerable increase over current healthcare spends.”

“However, real term considerations indicate that, based on current trends, healthcare spend would have reached about R180 billion by 2025. This raises the expectation that there will be a need to generate additional income to cover the difference between spending projections and what Government expects it will realistically require.”

“Government, with the upcoming Budget, will therefore have an opportunity to provide clarity on the funding issues. Of major interest will be any additional discussions on how health budget allocations will be affected by the extension of the implementation period for the NHI,” she said.

Download the full article . . . .  Uncertainty regarding funding of National Health Insurance

For a more a more detailed discussion, feel free to contact Ashleigh Theophanides (Director and Healthcare Actuary at Deloitte) at atheophanides@deloitte.co.za

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Kay Walsh of Deloitte discusses the South African budget and debt sustainability

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The South African budget and debt sustainability

For a more detailed discussion around the SA budget and debt sustainability, contact Kay Walsh (Executive Lead at the Deloitte Economics Advisory Unit) at kaywalsh@deloitte.co.za or Peter Searle (Analyst at the Deloitte Economics Advisory Unit) at pesearle@deloitte.co.za

Presenting the Medium Term Budget Policy Statement (MTBPS) in October 2012, Finance Minister Pravin Gordhan noted that fiscal policy guidelines in South Africa continue to promote counter-cyclicality, sustainability and intergenerational equity.

While counter-cyclical fiscal policy has been practiced in significant measure since the onset of the 2009 recession – government has run large budget deficits in a bid to bolster South Africa’s tentative economic recovery – debt sustainability and intergenerational equity have had to take a backseat.

The 2013 Budget, however, should see National Treasury putting an increased focus on stabilising public debt, reigning in the deficit and shifting the expenditure composition within the budget. With the arrival of the 2009 recession, government adopted a counter-cyclical fiscal stance to shield the economy from the sharp slowdown in global demand.

This saw the budget balance swing from a surplus of 1.7% of GDP in 2007/08 to deficits in excess of 4% of GDP between 2009/10 and 2011/12. While this strong fiscal response assisted in supporting the economy, it resulted in the rapid accumulation of government debt over a relatively short period of time.

CLICK HERE to download the full report . . . . The South African budget and debt sustainability

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