LEGISLATIVE PROCESS FOR TAXATION Standing Committee on Finance Presenters: National Treasury and SARS 30 July 2014
BUDGET SPEECH: FEBRUARY Minister announces Budget in Parliament Minister tables Budget Review in Parliament Minister briefs the SCOF on Budget proposals, including tax proposals 2
TAX PROPOSALS Tax proposals are contained in Chapter 4 and Annexure C of the Budget Review Chapter 4: Deals with major tax policy proposals Annexure C: Deals with technical proposals and corrections 3
ROLE OF NT & SARS NATIONAL TREASURY Responsible for Tax Policy Prepares Budget Proposals Chapter 4 Annexure C Drafter of Money Bills (Section 77 of the Constitution) Rates Bill TLAB Senior Managers: Director General : Mr Lungisa Fuzile Deputy Director General: Tax and Financial Sector Policy : Mr Ismail Momoniat Chief Director: Economic Tax Analysis: Mr Cecil Morden Chief Director: Legal Tax Design: Ms Yanga Mputa SOUTH AFRICAN REVENUE SERVICE Responsible for Tax Administration Supports Treasury in preparing inputs for Budget Proposals Chapter 4 Annexure C Supports Treasury in drafting of money bills, and drafts tax admin bills (Section 75 of the Constitution) TALAB Senior Managers: Acting Commissioner :Mr Ivan Pillay Chief Officer: Legal & Policy : Mr Kosie Louw Group Executive: Legislative Research and Development: Mr Franz Tomasek Legislative Research and Development: Mr Johan de la Rey Legislative Research and Development: Mr Gerrie Swart 4
TAX MONEY BILLS Money Bills refer to both appropriation and tax bills, as defined by section 77 of the Constitution and can only be tabled by the Minister of Finance Tax Money Bills deal with the following: imposition, abolition or reduction of national taxes, levies, duties or surcharges exemption from national taxes, levies, duties or surcharges Tax money bills have to be split up artificially as money bills cannot deal with any other substantial issues, so cannot deal with substantial tax admin issues Hence splitting in terms of s75 and s77 bills The process for amending Money Bills is done in terms of the Money Bills Amendment Procedure And Related Matters Act, 2009 The process for the passage of tax money bills in Parliament differs with appropriation money bills (refer to s8 and 11 of the Money Bills Amendment Procedure Act) and Rules) 5
Current Tax Acts Income Tax Act (personal income tax, corporate income tax, capital gains) Value Added Tax Act Customs and Excise Act Mining Royalty Act Estate Duty Act Transfer Duty Act Employment Tax Incentive Act Tax Administration Act Annual tax legislation is incremental, and makes amendments to some of all of the above Acts 6
ANNUAL TAX BILLS Rates and Monetary Amounts and Amendment of Revenue Laws Bill (Rates Bill) Tends to be a pure s77 bill, not split up, and though released in June the last two years, ambition is to release within two weeks of Budget Taxation Laws Amendment Bill is normally split into a s77 (money bill) and s75 Bills, and also includes TALAB amendments Released in July, after technical consultations with key stakeholders (as tax issues are market sensitive, consultations cannot take place BEFORE they are announced on Budget Day In addition to the above, if another general bill is required, it is called the Revenue Laws Amendment Bill In necessary, specified dedicated money bills (eg Maritime, environmental levy) are introduced, often driven by other depts but must be part of the Budget If necessary, specific bills for new taxes like carbon tax, mining royalty, gambling may also be introduced 7
Public consultation processes for tax bills No consultation takes place before Budget Day, as tax announcements are market sensitive However, public is free to submit suggestions to the Minister before Budget Day Minister announces tax proposals on Budget Day Though not legislated, many tax proposals (esp. rate adjustments) take effect on Budget Day or start of next tax year (1 March) Limited consultations take place with key stakeholders, to inform drafting of tax legislation Draft Bills are published on Treasury and SARS website for public comment for a period of one month Parliament normally invites Treasury/SARS to present draft bills Parliament has hearings around public comments two to three weeks after publication 8
Public consultation process for tax bills (cont) Note that both Treasury/SARS and Parliament run parallel consultation processes for tax bills Treasury/SARS presents a Response document to Parliament 4 weeks after closing date for comments, to indicate what public comments are accepted or taken into account Treasury prepares a revised draft of the Bill Minister of Finance tables tax bill in National Assembly within one month after Response document Parliament considers Bill (possibly amended) President signs Bill into law Textbooks on taxation updated early in following year Challenges with tax process Asymmetry of response (corporates vs individuals) 9
RATES BILL The Rates Bill gives effect to the tax rates and monetary threshold changes announced in the Budget relating to the following: income tax ; customs duties; and excise duties It enacts tax proposals that take effect on 1 March or 1 April of every year It deals with numerical adjustments It does not deal with new and substantive changes in law NT publishes the Rates Bill prior to formal introduction in Parliament There is little scope for public comment on the Rates Bill as it does not deal with substantive issues, and only comment is on whether the rates or thresholds are accepted or should be amended NT and SARS introduces the Rates bill informally to SCOF Thereafter, the Rates bill is tabled by the Minister formally in Parliament for consideration 10
TAXATION LAWS AMENDMENT BILL (TLAB) The TLAB gives effect to the tax proposals contained in Chapter 4 and Annexure C of the Budget It deals with more substantive changes to the tax law Changes to the tax law normally take effect in the following year after the bill has been passed into law NT publishes the draft TLAB for public comment prior to formal introduction in Parliament NT and SARS informally present the draft TLAB to the SCOF SCOF convenes public hearings on the draft TLAB before the formal introduction in Parliament NT and SARS deal with written public comments and conducts workshops with taxpayers on the draft TLAB NT and SARS thereafter prepare a response document on comments received and present the response document to SCOF The draft TLAB is revised, taking into account the public comments Thereafter the draft TLAB is tabled formally by the Minister in Parliament for consideration 11
TAX ADMINISTRATION LAWS AMENDMENT BILL (TALAB) The TALAB gives effect to the tax administrative proposals contained in Chapter 4 and Annexure C The TALAB deals with changes to the administration of the tax system to underpin amendments to the tax laws, modernise the administration or address anomalies that have been identified The TALAB is not regarded as a Money Bill because it deals with matters other than imposition or exemption of taxes The TALAB falls under section 75 of the Constitution SARS publishes the draft TALAB for public comment prior to formal introduction in Parliament NT and SARS informally present the draft TALAB to the SCOF in July SCOF convenes public hearings on the draft TALAB before the formal introduction in Parliament NT and SARS deal with written public comments and conducts workshops with taxpayers on the draft TALAB NT and SARS thereafter prepare a response document on comments received and present the response document to SCOF The draft TALAB is revised, taking into account the public comments Thereafter the draft TALAB is tabled formally by the Minister in Parliament for consideration in Oct 12
TIMELINES : RATES BILL Rates Bill 2014 Rates Bill 2013 Published on 10 June 2014 Published on 18 June 2013 Proposed date for informal presentation to SCOF: 30 July 2014 Informal presentation to SCOF : 24 July 2013 Tabling in Parliament: TBA Tabling in Parliament:24 October 2013 Passed by both Houses by end Nov or first week Dec 13
TIMELINES: TLAB AND TALAB TLAB and TALAB 2014 TLAB and TALAB 2013 Published on 17 July 2014 Published on 4 July 2013 Public comment period closes on 17 August 2014 Informal presentation to SCOF: 30 July 2014 SCOF public hearings: TBA Public comment period closed on 5 August 2013 Informal presentation to SCOF: 24 July 2013 SCOF public hearings: 20& 21 August 2013 Response document to SCOF: TBA Response document to SCOF: 11 September 2013 Tabling in Parliament: TBA Tabling in Parliament: 24 October 2013 Passed by Parliament end-nov or first week Dec 14
THANK YOU 15