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South African Chamber Of Business Says There Is Scope For Significant Tax Cuts

Lisa Ugur, Tax-news.com, London

21 February 2001

The South African Chamber of Business (Sacob) has said that there is room for significant tax breaks for companies and individuals, given the fact that the government garnered more revenue than expected from the new foreign dividend tax introduced in 2000, and is set to accrue even more from capital gains tax to be implemented in the coming months.

Indeed, South Africa's Finance Minister, Trevor Manuel, has promised substantial tax relief, which, together with a R6bn infrastructural development programme, is expected to greatly stimulate the economy. Also announced recently by President Thabo Mbeki were tax incentives for job creation.

Sacob parliamentary liaison panel chairman, Abri Meiring, said this week that it was likely Mr Manuel would use the money from foreign dividend taxation to provide further tax relief for individuals by lowering the marginal income tax rate from 42 per cent to 40 per cent. Tax consultants are also of the opinion that a cut in the marginal tax rate for individuals is a strong possibility.

There is also the hope that the Finance Minister might reduce corporate tax from the current 30 per cent rate to 28 per cent. Mr Meiring has predicted that in addition, the Finance Minister will want to shore up any tax loopholes, particularly those relating to share option schemes.

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