Budget Speech 2021 – Corporate Tax Outlook

The ongoing pandemic, mounting debt and economic challenges exemplified by the growing unemployment rates will most likely affect the prospects for significant tax policy changes this year. Covid-19 has significantly increased government expenditure. To this end, the Finance minister is bound to focus on reviving the economy and stimulating commercial growth. The question is, how can South Africa achieve these objectives, and what would that mean for businesses and individuals in terms of tax policy changes?

What Could This Mean for Your Business?

In the Medium Term Budget Policy Statement, Mboweni announced his plan to generate tax revenue of R40 billion within the next four years. In practice, one of the most common ways to increase government revenue is to increase taxes. One does wonder, though, can South African individuals and businesses afford tax increases at this point? It’s a catch-22 situation. In analysing how many businesses have gone down during the pandemic and the dire need to encourage investments, chances are, corporate taxes will go down from the current 28%. Taking this approach will stimulate economic growth and reduce the unemployment rates, which will in turn increase income tax and VAT, thus stabilising our tax base. This level of financial support towards businesses is imperative in augmenting the South African economy and saving livelihoods.

The Importance of Staying Informed

We encourage all businesses to listen to the Minister’s speech to determine the effect of potential changes in businesses, investments, competitiveness, taxes and job creation. All the documents relating to the Budget, including the Minister’s speech, will be available at the Treasury website and the SARS Budget webpage as soon as the Minister starts speaking in Parliament.

The pandemic has presented the most gruesome challenges the world has ever seen in modern history. South Africa wasn’t spared. Stay informed on what’s going to be the way forward for the South African economy. As B-Advisory, your advisory partner, we are always ready to assist you to tackle policy changes, tax changes and any other changes that affect South African businesses and individual taxpayers.