South African Tax is derived from funds collected from individuals who are working, through a taxation process administered by the South African Revenue Services (SARS). The country’s government receives these funds and uses them to provide services for its citizens.
In the South African context, the government generally uses tax as a way to increase revenue. For instance, in the 2015/2016 period, for every rand of revenue generated by government, 86 cents were in the form of tax.
Value-Added Tax, for example, is one tax method that has recently been used by the South African government to increase revenues.
In 2018 the Finance Ministry announced a 1% VAT increase- the first since 1993. Even though this increase from 14% to 15% is meant to help the government reach the R36 billion target and has been punted as something that will mainly affect the rich, this hasn’t been the case. It has added to the burden of low-income citizens because it has led to an increase in the price of fuel, and therefore food.
New Tax laws which are set to come into effect from 1 March 2020 impose taxes of 45% on SA residents abroad, who have income that exceeds R1 million.
South African income tax payers are number 31 in terms of world averages. Gauteng, the most over-populated province in the country is also where the majority of taxpayers come from. Income tax was introduced in 1914 in this country.
Understanding South African Tax in-depth is a good way of figuring out ways to contribute while also protecting your financial interests.
Business owners also need to work hard on keeping track with the numerous regulations changes pertaining to business tax. They should be able to administer changes as efficiently as possible, without affecting business operations.