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South Africa Extends Tax Relief Measures After Civil Unrest

Posted on Aug. 13, 2021

In response to the continuing pandemic and recent unrest in the country, the South African government has submitted two draft tax bills that would extend COVID-19 tax relief measures.

The second installment of the 2021 Draft Taxation Laws Amendment Bill and 2021 Draft Tax Administration Laws Amendment Bill — which contain emergency tax measures with retroactive effect from August 1 — are open for public comment, according to an August 12 National Treasury statement.

South Africa has decided to extend the COVID-19 tax relief measures because unemployment is high and the economy is still sluggish from pandemic shutdown measures, according to the statement. The economic situation has been exacerbated by the widespread rioting and looting that erupted after former President Jacob Zuma turned himself in to police in July for being in contempt of court, the government said.

The bills extend for another four months tax relief measures put in place in April 2020 by the Disaster Management Tax Relief Act, according to an August 12 Treasury explanatory note. Those measures were initially set to expire July 31 but were extended and revised by legislation passed in August 2020.

The latest draft tax bills would expand the employment tax incentive program to allow employers to increase by ZAR 750 (about $51) a month the maximum incentive they can claim for each qualifying employee. Employers could calculate their employment tax incentive claim based on actual payment to employees even if they worked less than 160 hours a month.

Also, the bills provide for the deferral of 35 percent of Pay As You Earn liabilities without penalties or interest and the deferral of excise duties on alcoholic beverages.

In February South Africa reversed course on plans, announced in June 2020, to increase taxes to pay for pandemic spending. The country faces a budget deficit of 14 percent of GDP for 2020-2021, which it hopes to narrow to 6.3 percent by 2023-2024, according to a February 24 budget review.

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