Unemployment Insurance Fund (UIF)
The UIF is mandated to alleviate poverty by providing effective short-term unemployment insurance to all workers who qualify for unemployment and related benefits, as legislated in the Unemployment Insurance Act of 2001. Over the medium term, the fund aimed to focus on providing social insurance benefits and improving coverage to vulnerable groups and contributors.
The fund’s primary operations include registering employers and employees, collecting contributions from employers, and paying benefit claims to eligible contributors. The architectural and organisational review and the integrated claims management system projects that are under way within the department should enable the fund to institute improved systems and capabilities. This is expected to result in updated employer and employee registers and linked systems for the lodging and payment of claims within shorter turnaround times.
Over the period ahead, the fund plans to enhance the functionality and capabilities of its mobile applications to provide a range of services that are expected to alleviate queues in labour centres, among other things. To enhance the capabilities of labour centres over the medium term, the UIF planned to deploy mobile buses with kiosks in KwaZulu-Natal, Gauteng and North West. Through its Temporary Employer/Employee Relief Scheme, the fund provides support to distressed businesses that seek to retain their employees. On behalf of the fund, the Commission for Conciliation, Mediation and Arbitration is responsible for the administration of the scheme and adjudicating applications.
Donations tax
A donation is any gratuitous (free or at no charge) disposal of property including any gratuitous waiver or renunciation of a right. If the person (donee) receiving the donation gives anything in return, it is not a donation.A donation takes effect when all legal formalities for a valid donation have been complied with. Donations tax is levied at a rate of 20% on the aggregated value of property donated not exceeding R30 million, and at a rate of 25% on the value exceeding R30 million.
Donations tax applies to any person (for example: individual, company or trust) that is a resident and non-residents are not liable for donations tax.The person making the donation (donor) is liable to pay the donations tax, however if the donor fails to pay the tax within the payment period the donor and donee are jointly and severally liable.
Estate Duty
When a natural person (taxpayer) dies, that person is called a ‘deceased person’ and all his or her assets on date of death will be placed in an estate.This estate is called an estate of a deceased person (commonly known as a ‘deceased estate’). Assets in a deceased estate can amongst other things include immovable property (house), movable property (car, furniture, etc), cash in the bank, etc.The person who administers a deceased estate is called an ‘Executor’. Once the Executor has finalised all the administration in the deceased estate, the remaining assets (after paying all the debts) will be distributed to the beneficiaries.
A beneficiary can consist of either heirs and/or legatees.A legatee is a person who receives a specific asset from the deceased estate. An heir is a person who receives the balance of the estate (that is, after all disposals to a legatee are finalised). Estate Duty is levied on the worldwide property and deemed property of a natural person who is ordinarily resident in South Africa and on South African property of non-residents.Various deductions under Section 4 of the Estate Duty Act of 1955 are allowed to determine the net value of the estate.
An abatement of R3.5 million is allowed against the net value of the estate to determine the dutiable value of the estate.The Estate Duty is levied on the dutiable value of an estate at a rate of 20% on the first R30 million and at a rate of 25% on the dutiable value of the estate above R30 million.
Securities Transfer Tax (STT)
STT is levied at the rate of 0,25% on every transfer of a security, which means any share or depository in a company or member’s interest in a close corporation, and any reallocation of securities from a member’s bank restricted stock account or a member’s unrestricted and security restricted stock account to a member’s general restricted stock account.
Transfer Duty
Transfer Duty is a tax levied on the value of any property acquired by any person by way of a transaction or in any other way. For the purpose ofTransfer Duty, property means land and fixtures and includes real rights in land, rights to minerals, a share or interest in a “residential property company” or a share in a share-block company.All conveyancers are requested to register with SARS.
Value-Added Tax (VAT)
VAT is an indirect tax on the consumption of goods and services in the economy. Revenue is raised for government by requiring a business, that carries on an enterprise to register for VAT. In doing so, the business will charge VAT on supplies of goods and services made by it, on the importation of goods and on imported services (subject to certain conditions).
The business will also be entitled to deduct any VAT charged to it, or under limited circumstances from a business that is not registered for VAT, in respect of a supply made to it. VAT is therefore non-cumulative, meaning that a credit/ deduction is allowed for VAT paid in previous stages, within the production and distribution chain.
The business is required to pay the difference between the VAT charged by it and the VAT charged to it, or claim aVAT refund where the VAT charged to it exceeds the VAT charged by it.VAT is therefore, charged at each stage of the production and distribution process and it is proportional to the price charged for the goods and services.
It is compulsory for a person to register for VAT if the value of taxable supplies made or to be made, is in excess of RI million in any consecutive 12-month period.The standard rate ofVAT is I 5%, and there is a limited range of goods and services which are subject to VAT at the zero rate or are exempt from VAT.
The following goods and services are zero-rated:
- Exports
- 19 basic food items
- Illuminating paraffin
- Goods which are subject to the fuel levy (petrol and diesel)
- International transport services
- Farming inputs
- Sales of going concerns, and
- Certain grants by government.
Goods and services exempted from VAT are:
- Non-fee related financial services;
- Educational services provided by an approved educational institution;
- Residential rental accommodation; and
- Public road and rail transport.
Basic foodstuffs zero-rated in South Africa
Brown bread; Maize meal; Samp; Mealie rice; Dried mealies; Dried beans; Lentils; Pilchards/ sardinella in tins; Milk powder; Dairy powder blend; Rice;Vegetables; Fruit;Vegetable oil; Milk; Cultured milk; Brown wheaten meal; Eggs; Edible legumes and pulses of leguminous plants.
Fuel taxes
The basic fuel price is related to the costs of purchasing petroleum products from international markets, and the costs related to shipping these products to South Africa.This cost is largely influenced by the international price of crude oil and the R/$ exchange rate.
Environmental levies
The South African Government has responded to the serious global challenge of environmental pollution and climate change by introducing several environmental taxes that are intended to modify behaviour of the country’s citizens for sustainable development of the economy.
Plastic Bag Levy
The Plastic Bag Levy was introduced to reduce litter and encourage plastic bag reuse. It is charged at 32 cents per bag as from I April 2024.
Electricity Generation Levy
The electricity generation levy was Introduced to encourage sustainable electricity generation and use. The levy is applied to electricity generated from non-renewable sources and costs
3.5 cents per kWh.
Incandescent Bulb Levy
The electric filament lamp levy was introduced to promote energy efficiency by discouraging the use of incandescent light bulbs. It is charged at RIO a bulb from I April 2020.
CO2 Motor Vehicle Emissions Levy
The CO2 motor vehicle emissions levy on passenger and double- cab vehicles was introduced to encourage the manufacture and purchase of more energy efficient motor vehicles. It is charged at R 120 for every gram above 9SgCO2/km for passenger vehicles and R 160 for every gram above I 75gCO2/km for double cab vehicles.
Tyre Levy
The tyre levy on new pneumatic tyres was introduced to encourage efficient tyre use. Although the tyre levy is not earmarked, it indirectly supports the responsible recycling of obsolete tyres.The levy was implemented in 2017 and the current rate is R2.30/kg.
Health Promotion Levy
The Sugary Beverages Levy took effect on I April 2018 and the current rate is 2.21 cent/ gram of the sugar content that exceeds 4g/ I 00 ml.The levy applies to specific sugary drinks and concentrates used in the manufacture of sugary drinks to combat obesity and promote healthier consumer beverage choices.
Diamond Export Levy
A Diamond Export Levy on unpolished diamonds exported from South Africa was introduced, effective from I November 2008 at a rate of 5% of the value of such diamonds.
Southern African Customs Union (SACU)
SACU consists of Botswana, Lesotho, Namibia, South Africa and Eswatini. The SACU Secretariat is located in Windhoek, Namibia. SACU was established in 1910, making it the world’s oldest Customs Union. Negotiations to reform the 1969 Agreement started in 1994, and a new agreement was signed in 2002.The member states form a single customs territory in which tariffs and other barriers are eliminated on substantially all the trade between the member states for products originating in these countries; and there is a common external tariff that applies to non-members of SACU.
Excise duties
Excise duties are levied on certain locally manufactured goods and their imported equivalents. Specific excise duties are levied on tobacco and liquor products. Ad valorem excise duties are levied on products such as motor vehicles, cellular telephones, electronics and cosmetics.
Customs duties
Customs duties are imposed by the Customs and Excise Act of 1964. Ordinary customs duty is a tax levied on imported goods and is usually calculated on the value of goods imported and collected by the customs unit within SARS. Customs duty rates in Part I of Schedule No. I and trade remedies relating to the importation of goods such as anti-dumping, countervailing and safeguard duty are set out in Schedule No. 2 of the Schedules to the Act and are determined through trade policy in terms of the International Trade Administration Act of 2002 administered by the International Trade Administration Commission.
Other taxes
Rates on property
Property-related taxes include municipal rates and charges for refuse and sewerage, which are collected by municipalities.
Payment channels
Most taxpayers are now using electronic payment platforms which significantly improve turnaround times.Cash collections at branches have been reduced as have the risks associated with them. From 1 May 2020, cheque payments in South Africa may not be more than R50 000. Payment methods other than branch payments are:
- eFiling:this required a taxpayer to register as an eFiling client to make electronic payments using this channel; and
- Payments at banks:taxpayers can make either an internet banking transfer or an over the counter deposit.