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Taxation
Thursday, May 1, 2008
Good for business

The reported stance by the Minister of Finance, Trevor Manuel, on the potential changes to the tax policy is good news. Comments Johan Troskie, Director – Deneys Reitz Tax Services, “It is an economic fact that companies in South Africa, notably small and medium enterprises, are the main drivers of employment in South Africa. The government has not succeeded in making major inroads into the unemployment problem.”
A review of tax policy, especially if this is aimed at assisting small, medium and large businesses in a concerted effort to stop the unemployment tide is the right approach. There should also be a tax policy shift in allowing companies more tax incentives for training people in an economy with severe skills shortages, he says.
“As a developing economy, South Africa should be doing a great deal more to attract foreign business.” For example, South Africa could do a lot more to establish itself as a holding company haven for business into Africa, and beyond. At the moment, South Africa offers no benefits to companies who own subsidiaries elsewhere in the world.
Troskie agrees with the view that some international group companies take short-term advantage of tax benefits, but says that this is generally not the attitude of business. Businesses need certainty, stability and long-term consistency in regard to tax incentives and favourable tax provisions. When these elements are sustained, companies would generally contribute to the local economy through employment, investment, contribution and spending.
Troskie also lauded changes to tax policy to make it easier for industry generally, local and foreign, to do business in South Africa. If this means giving more decision-making powers to certain officials within SARS, or through other measures that would reduce tax complexity, these would be widely supported, because South Africa needs to make it easy and profitable for companies to do business and to set up and operate their companies.
As a developing economy, we should do away with as much of the red tape as possible without compromising the necessary checks and balances for company formations and company administration. Again, says Troskie, the fault often lies not so much with the process, but with the lack of efficiency that some of the government departments currently portray.
We need to say to government:, train your people to be efficient and let the policies show that South Africa has the ability to create a beneficial environment for trade - an environment free from unnecessary burdens. Huge economic benefits will flow from such steps, it has been proven in many parts of the world.

Copyright © Insurance Times and Investments® Vol:21.4 1st May, 2008
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