SONA highlights: Preparing for the 2020 Budget Speech and beyond
Updated: Sep 8, 2020
Author: Riëtte Engels-Van Zyl – Director
While Government revenue functions should act by recognising the trends and challenges expected in 2020 and work to identify solutions today, successful corporates and other taxpayers of South Africa must adapt to change by anticipating and acting too – rather than just reacting.
The following key SONA highlights are likely to impact broader Tax reform responsibilities for taxpayers when the Minister of Finance will outline a series of measures to reduce spending and improve composition in the Budget Speech next week:
The establishment of a sovereign wealth fund:
The purpose of the fund is meant to preserve and grow the national endowment of our nation ‘giving practical meaning to the injunction that the people shall share in the country’s wealth.’
The establishment of a sovereign wealth fund will most likely have to be funded by the current tax base in South Africa.
A youth employment initiative funded by a 1% allocation of the overall budget:
Employment incentives and skills development levies could very well be raised in the Budget Speech to facilitate the need to address the high levels of youth unemployment.
The establishment of a state bank:
This is part of the effort to extend access to financial services to all South Africans. The Minister of Finance will provide details in his Budget Speech.
The African Continental Free Trade Area will come into effect on 1 July 2020:
We expect the Budget Speech to outline the impact of the finalisation of the rules that define:
what is a ‘Made in Africa’ product?
proposed Custom and Excise tariff lines that will be reduced to zero over the next five years;
and the services sectors that will be opened up across the continent.
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