In the main, the tax proposals seek to reduce the fiscal deficit through an increase in excise duties, the general fuel levy and environmental taxes.  There will also be an increase in capital gains tax and transfer duty, together with fiscal drag on personal income tax to account for inflation.

Future tax considerations by Treasury may include an upward adjustment of the VAT rate and an increase in personal taxes (aimed at higher income earners).  Increased focus will be put on international transactions, transfer pricing and disclosure of offshore assets/income.

Specific tax proposals include:

  • Increasing the monthly medical aid scheme contribution tax credits from R270 to R286 for the first two beneficiaries and from R181 to R192 for additional beneficiaries.
  • Postponing the requirements for provident fund members to annuitize until 1 March 2018.
  • Relaxing voluntary disclosure rules for a period of six months from 1 October 2016 to allow non-compliant individuals and firms to disclose assets and income abroad. 
  • The possible extension of the employment and learners tax incentive schemes for a period of one year.  Qualifying tax-free bursaries by employers will increase from a maximum of R30 000 to R40 000.
  • Tax relief for mining companies investing in community-based projects. 
  • Anti-avoidance measures - these will include:
    • Preventing tax avoidance through the use of trusts by –
      • Including the value of an asset transfered to a trust on loan account in the transferor's estate for estate duty purposes; and
      • Treating interest-free loans to the trust as donations.  
  • Increasing the Capital Gains Tax maximum effective rate from 13.7% to 16.4% for individuals and from 18.6% to 22.4% for companies.  The effective rate applicable to trusts will increase from 27.3% to 32.8%.
  • Increasing the transfer duty for sale of property over R10 million from 11% to 13%. 
  • Facilitating refinery upgrades in respect of clean energy in order to meet new standards.  To achieve this, an accelerated depreciation allowance on capital expenditure of three years instead of the normal five years is proposed.
  • Encouraging investment in renewable energy by including additional capital expenditure relating to necessary infrastructure as a tax deduction e.g.: fences and roads.
  • Increasing the fuel levy by 30c per litre from 1 October 2016.
  • Implementing the tyre levy at a rate of R2.30 per kg of tyre.
  • Ancillary levies and levy increases, including a tax on light bulbs, plastic bag levies and motor vehicle emissions taxes.
  • Introducing a tax on sugar-sweetened beverages from 1 April 2017.
  • Increasing alcohol excise duty rates by between 6.7% and 8.5%. 
  • Reviewing the tobacco product taxation.
  • Measures to reduce the red tape for small businesses.