Yasmeen Suliman Director - Corporate Tax KPMG Services:Managing Disruption in your Tax Affairs
Yasmeen Suliman Director - Corporate Tax KPMG Services:Managing Disruption in your Tax Affairs



more share options...

RSS

‹ Back

Yasmeen Suliman Director - Corporate Tax KPMG Services:Managing Disruption in your Tax Affairs

2017-02-14

The Panama Papers, Brexit, the global economic meltdown, BEPS (Base Erosion Profit Shifting), digital innovation and advances in technology are all seen as new age disruptors.

In some quarters there is a belief that South Africa is somewhat shielded from this disruption, being on southernmost tip of the 'Dark Continent', but this is a fallacy. We are no more immune than the rest of the world, and one needs to look no further than the reams of tax legislation passed in the last year, the developments at the South African Revenue Service (SARS) in terms of technology advancement and tax co-operation as well as automatic exchange of information agreements our government has entered into over the last two years, to confirm this fact.

Unfortunately, what this means for taxpayers is that tax compliance is becoming more challenging. Our tax laws have become so complex that it has become difficult for taxpayers to say with confidence that they are compliant in all respects - no matter how careful one is, there is always room for error.

With advances in technology, access to more information and armed with additional powers afforded by the Tax Administration Act, SARS is now able to more accurately identify taxpayers to be audited, successfully raise assessments and impose penalties for non-compliance.

Frustratingly, there is still a willingness, both internationally and in South Africa, to use 'tax evasion' and 'tax avoidance' as interchangeable terms and the term 'tax dodging' to cover them both. While it is recognised that simply doing what is legal is not the only benchmark, there is a difference between illegal evasion and fraud on the one hand and legal activity that happens in the legitimate economy on the other.

Conflating these two concepts destroys trust and hampers taxpayers' ability to plan their tax affairs properly. After all, it is a long-established principle that a person may structure his affairs to pay the least amount of tax. However, the National Treasury and SARS appear to be worried to the point of paranoia that taxpayers are finding 'loopholes' in the tax legislation - many of the complex amendments to the tax legislation over the last few years are directed towards closing these loopholes.

Examples of these are the amendments made last year to hybrid equity instruments, the taxation of dividends arising from share schemes and interest-free loans made to trusts.

And while there seems to be some uncertainty whether South Africa will have the same Minister of Finance for much longer, there are bound to be more changes announced in the Budget Speech in February that will bring further disruption.

Taxpayers and corporates have to start thinking differently in order to navigate through these factors. Some of the following suggestions could help:
  • The starting point is arming yourself with knowledge - get to know the legislation and the amendments that could affect your organisation. Get to know it yourself or hire-in someone who can assist, and ensure that your staff are adequately trained to identify and deal with tax issues.
  •     Have a thorough understanding of your organisation's tax affairs - check for gaps that expose the organisation to risk and penalties, conduct regular reviews to ensure compliance and implement internal control systems that mitigate the risks identified.
  •     Plan for change - for example, if your organisation is entering into a new transaction or there are amendments in tax legislation that affect your organisation, assess the impact by taking proper advice and make the necessary changes to minimise the impact.

T: 082 778 1031
yasmeen.suliman@kpmg.co.za




Yasmeen Suliman Director - Corporate Tax KPMG Services:Managing Disruption in your Tax Affairs

Copyright © 2024 KwaZulu-Natal Top Business
x

Get the Flash Player to see this player.