Angola – Recent Amendments affecting payroll

Legal Framework for Mandatory Social Security Protection and Social Security Contributions

Presidential Decree No. 227/18, dated September 27th, 2018, approves the new Legal Framework for Mandatory Social Security Protection and Social Security Contributions, repealing the Decree No. 38/08, dated June 19th. Essentially, the following points stand out within this new regime:

  • Scope:
    • Employers and equivalent entities and employees who are covered by Mandatory Social Protection;
    • Other special regimes that comprise the Mandatory Social Protection.
  • The contribution rate remains set at 8% for the employer and 3% for the employee, of the total remuneration of the employee upon which the contributions are levied.
  • Significant broadening of the basis for Social Security contributions, being considered the total gross amount of allowances of the employee, namely all cash benefits which, according to the legal labour relationship, are owed by the Employers to the employees.
  • The following cash benefits are excluded from Social Security contributions taxable basis:
    • Social benefits paid by the employers within the scope of Mandatory Social Protection (e.g. Family allowance);
    • Vacation allowance.
    • The amounts corresponding to the subscription or participation made by employees and employers of complementary social protection arrangements as foreseen in specific legislation.
    • The amounts corresponding to the subscription or participation made by employees and employers of complementary social protection arrangements as foreseen in specific legislation.
    • The amounts corresponding to the subscription or participation made by employees and employers of complementary social protection arrangements as foreseen in specific legislation.
  • The contributions payment, whether owed by the employer or due by the employee, is responsibility of the employer and should be made through the withholding mechanism, directly upon the employee’s allowances.
  • The deadline for payment of the monthly contributions is maintained (until the 10th day of the following month), and the non-compliance of this deadline is subject to the payment of interests at the rate of 1% per month, upon the initial amount due.
  • This Decree enters into force 90 days after the date of its publication, this is, on December 26th, 2018.

Make your B-BBEE spend a “Pay-Back” and not a “Pay-Away”

Section 12J investments have gained significant attention over the last 2-3 years due to their attractive tax benefits. By offering investors a full tax deduction for the amount they invest, section 12J of the Income Tax Act essentially gives investors back their tax money in the year in which the investment is made, and that deduction will be permanent if the investment is held for five years.

At a first glance, this legislation is more beneficial to individuals and trusts than businesses, since they pay higher marginal rates than companies. However, there is another aspect to Section 12J investments that could potentially be of significant value to local companies.

By investing into a correctly structured Section 12J VCC fund, a South African company’s investment will qualify as spending on enterprise and supplier development under the new BEE codes. As such, “Corporate South Africa” could get empowerment credits by using these vehicles.
Having this knowledge, it is hard not to maximise the benefit from ED & SD spend, through investing in correctly structured Section 12J VCC funds. We assist our clients in achieving their enterprise and supplier development (“ESD”) targets in terms of the BEE Codes, through:

  • A business who wishes to attain BEE points can use the 12J as conduit between the investor and a 51% Black Owned entity, with less than R50m in annual revenue.
  • Points can be recognised for enterprise or supplier development contributions given to entities which are at least 51% black owned, with a turnover under R50million. Contributions can be in the form of grants, loans, equity investments, etc, per Annexe 400B of Code 400.
  • The 12J would act as a 3rd party and would direct the investment to a suitable beneficiary. The 12J could have a number of beneficiaries.
  • Converting their ED and SD expenditure into a valuable investment
    This then becomes a huge benefit to companies who are currently writing off their ED or SD spending as a donation or simply an expense.
  • By using a Section 12J vehicle you not only get a tax rebate, but also end up with an investment that can generate returns and become a “pay-back” after 5years….

At WTS we remain firm on our transformation advisory objectives which is aligned to the National Growth Plan and our country’s Vision 2030. In this regard we offer our clients a unique suite of solutions including Economic Transformation Services and ensure compliance, sustainability, spend optimisation and collaboration opportunities which includes beneficiary impact assessments and reporting. We are proud to announce our partnership with nReach One, a duly registered section 12J Fund, which is uniquely positioned to optimize the value we offer to both our Multi-National and local clients.

South Africa has spent over R10 billion on CSI during 2018 alone, however, we have not seen the expected impact and positive results of this allocation.

Contact WTS to find out how we can, together, make a positive, sustainable impact during 2019 and not repeat past mistakes.

For more information, contact:
Tel: +27 (0) 12 003 7009
info@wts-southafrica.com

WTS Business Services Becomes First International Distributor for the Digitised Corporate Governance Framework® Software ̴ Praefectus™

WTS Business Services (Pty) Ltd (‘WTS BS’) is pleased to announce its appointment as an international distributor of the cloud-based Praefectus™ software platform, which empowers the acclaimed Corporate Governance Framework®.  Praefectus™ was jointly developed by two South African companies, CGF Research Institute (Pty) Ltd (‘CGF’) and Madjenta Holdings (Pty) Ltd.

 As an organisation which provides an array of governance and business consulting services, which include specialist tax, financial and technology advisory services in South Africa, WTS BS is ideally suited to add the Praefectus™ software to its suite of professional services.  As a global entity which is well established in over 100 countries internationally, the company is excited to take this product to Europe and Africa, and then expand to other continents.

Charl Niemand, Chief Executive Officer of WTS South Africa (a member firm of WTS Global), says that the appointment of WTS BS as an international distributor of Praefectus™ could not come at a better time.  “We are looking forward to further embrace certainty, transparency, investor confidence and good governance in South Africa and Africa, as required by our local and multi-national clients,” he says, “and we believe that the implementation of the digitised Corporate Governance Framework® within organisations will achieve this end.”

The Corporate Governance Framework®

While good governance is often touted as a lofty ideal, it can now be given practical application in the form of the digitised Corporate Governance Framework®, which provides, among other things, an electronic dashboard to assist vested, key stakeholders to manage an organisation’s governance processes and determine the status of good governance across the organisation.  It also provides an organisation and its assurance providers with the capability to attest to a greater level of its enterprise-wide corporate governance status, and improved levels of transparency, including better oversight and monitoring at board and management levels.

The Corporate Governance Framework® provides a singular schematic view of an organisation’s overall strategic and operational governance position in real time, from the perspectives of board accountability and management responsibility, and therefore unequivocally demonstrates the organisation’s culture and acceptable standards of behaviour.  It also focuses the organisation, through its board of directors and key senior executives, on those aspects of the business which require attention, those which have improved over time, and those which are running optimally, from a GRC point of view. 

Why WTS BS believes in Praefectus™, the enabler of the digital Corporate Governance Framework®

In the current turbulent global socio-economic climate, it is a given that good corporate governance is essential.  All organisations are required, by codes of good governance, legislation and regulation, as well as by their stakeholders, to operate ethically and sustainably within their realm of influence, with a fundamental focus to create value.  Organisations are required to be responsible corporate citizens and to be seen as such, in order to be sustainable over time.

The Praefectus™ software assists an organisation to achieve this end, by providing relevant, concise, holistic and timeous information to its stakeholders on the strategic direction, performance, risk and opportunities which it faces.  By focusing and reporting on material items — and how these are inter-linked — an organisation is able to foster a culture of transparent and meaningful communication, and in so doing, continuously build trust with each of its key stakeholders.

According to Niemand, “the products and services WTS offers to its clients will be immeasurably enhanced with this carefully selected Praefectus™ software which fits perfectly with our current product portfolio and aligns with our own values and high standards of governance and ethics.”

More about WTS

The WTS BS team consists of top consulting specialists, with many years of business experience, who advise organisations on a suite of corporate governance services, which include Enterprise Resource Planning (ERP), Data Management and Reporting, Artificial Intelligence, Bespoke Business Systems, Blockchain, System Development, Forensic Services, Digital Marketing, Management and Financial Services, B-BBEE and Business Development, among others.  These services fit ideally within an organisation’s Corporate Governance Framework®.

With representation in over 100 countries, WTS Global has grown to a leadership position as an international tax practice, which offers a full range of tax services and aspires to become the preeminent non-audit tax practice worldwide.

WTS Global deliberately refrains from conducting annual audits in order to avoid any conflicts of interest, and to be the long-term trusted advisor for its international clients.  Clients of WTS Global include multinational companies, international mid-size companies, as well as private clients and family offices.  The member firms of WTS Global are carefully selected through stringent quality reviews.  They are strong local players in their home market, who are united by the ambition of building a truly global practice that develops the tax leaders of the future and anticipates the new digital tax world.  WTS Global effectively combines senior tax expertise from different cultures and backgrounds and offers world-class skills in advisory, in-house, regulatory and digital, coupled with the ability to think like experienced business people in a constantly changing world.

WTS Global has been acknowledged regularly as a Tier 1 network by Chambers & Partners and has been recently awarded as the European Indirect Tax Firm of the Year 2018 by International Tax Review.

Are you a multi-national entity with a global policy prohibiting the parting of ownership (eg BEE) in foreign jurisdictions?

Broad Based, Black Economic Empowerment (hereinafter “BEE”), whilst not compulsory, has become a business imperative for most organisations, but is also one of the biggest threats if not understood and implemented properly. The reality of BEE in context of the broader economy is that though the Broad-Based Black Economic Empowerment Act 2003 as amended by Act 46 of 2013, is not compulsory, the inclusion or exclusion of your business in trade could be determined by your strategic action towards BEE. BEE could be the single game changer in the future as new legislation increases the impact of non-compliance.

Download our Broad Based Economic Brochure here.

Contact us for more information!

South African Tax Residents Working Abroad

With effect from the 1 March 2020, South African working abroad will no longer get the benefit of tax exemption for earnings earned from a foreign source except for the first million rand in terms of revised section 10(1)(o)(ii) to the Income Tax Act No 58 of 1962.

What choices do South African Tax Residents working abroad have? Firstly, they can accept the changes in the law and pay the tax due on this foreign remuneration in South Africa. South African employers paying the foreign remuneration will have to withhold PAYE on the monthly salary but can consider the foreign tax paid on the same remuneration? There is still some debate as to whether the Fourth Schedule of the Income Tax Act No 58, of 1962 automatically allows the employer to take into account the foreign tax paid or whether a hardship directive needs to be applied for on behalf of the employee. Hopefully, SARS will add this directive application on line to speed up the directive application process. The employee should therefore not be out of pocket other than to the extent that the South African tax is more than the foreign tax paid.

Should the employer not be a local South African employer then then South African working abroad will have to register as a provisional taxpayer. Instead of only submitting an annual tax return they will now have to submit provisional tax returns at the end of August and February of each year. The estimate made in February must be accurate to meet the requirement of being within 80% of the final taxable income reflected on the income tax return. Failure to register as a provisional taxpayer or incorrect estimates comes with hefty fines. Once again, any foreign tax paid can be taken into account as a credit against the local taxes payable. On assessment the taxpayer will have to furnish proof of the foreign tax paid, and with different tax years in each country this will not always be an easy process.

The second alternative is for South African residents working abroad is to consider emigrating from South Africa. This decision cannot be taken lightly as any resident returning to South Africa within a 5-year period will be seen as a failed emigration.  Failed emigration have both Reserve Bank and South African Revenue Service implications. South African residents who plan to emigrate will have a Capital Gain Tax implication at the time that they emigrate. The need to disclose gains made on all assets from date of purchase to date of emigration. This has a cashflow implication as the assets would not have been sold yet the tax on the gains would have to be paid to obtain a tax clearance for the purposes of emigration.

The other problem that South African may have is where could they obtain residency in another country to ensure that the emigration is possible.  If South African are unable to get residency due to ancestry rights in another country the next alternative is to buy residency rights which does not come cheap.

We at WTS South Africa (Pty) Ltd can assist South Africans with the emigration process from both a Reserve Bank and South African Revenue Services perspective. Our global firm can advise on countries that offer emigration facilities and assist with the set up in these various countries.

March 2020 may seem like some time from now, but time runs away with us. We therefore suggest that you need to consider your options and start putting things in place for whatever choice you may make.

Summary SA transfer pricing compliance rules

Country-by-Country reporting

Multinational Entities (“MNEs”) impacted are defined in the South African CbC regulations as having a total consolidated group revenue of more than R10 billion or €750 million. This is applicable when the Ultimate Parent Entity (“UPE”) submits the CbC report and is a tax resident within South Africa. Also this is applicable when a South African resident Constituent entity must submit the CbC report on behalf of the non-South African tax resident UPE. The CBC report must be submitted no later than 12 months after the last day of each reporting fiscal year of the MNE group beginning or after 1st January 2016. For MNEs with a December year end an extension was granted by SARS until 28 February 2018 to submit CbC reports.

 

Master and local files

If the aggregate of a person’s potentially affected transactions (cross border connected party transactions) for the year of assessment, without offsetting any potentially affected transactions against one another, exceeds or is reasonably expected to exceed R100 million, and that person is a South African resident, the person must submit a return in the specified form relating to a:

  • master file, where the ultimate holding company in respect of the Group that the person is a member of is a resident, or where a master file that substantially conforms with Annexure I to Chapter V of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2017 is prepared by any other entity within the group that the person is a member of; and
  • local file.

 

Local transfer pricing documentation

In terms of the Tax Administration Act, where the thresholds set out above are not applicable, taxpayers that engage in an affected transaction/s must still keep the records, books of account or documents that enable the taxpayer to ensure and SARS to be satisfied that such affected transaction/s is conducted at arm’s length.

 

Summary conclusion

All South African resident taxpayers engaging in affected transactions must prepare transfer pricing documentation, but the nature and extent of the documentation to be prepared and potentially submitted will vary, depending on whether they fall above or below the thresholds discussed above.

Kindly contact Nico Kruger, Transfer Pricing Specialist on mobile: +27 79 520 2822 or via email: nico@wts-southafrica.com for more information and details.

Are you ready? SARS to collect Health Promotion Levy “Sugar Tax” (SBL) from 1 April 2018

The South African Revenue Service (SARS) will collect the Sugary Beverages Levy (SBL) as from 1 April 2018.
The levy falls under the Rates and Monetary Amounts and Revenue Laws Amendment Bill, 2017, as passed in Parliament on 5 December 2017.
Part 7A of Schedule No.1 to the Customs and Excise Act, 1964, provides for a health promotion levy on sugary beverages which have been manufactured in or imported into South Africa. Ready to drink beverages as well as preparations for making such beverages are included in the scope of the levy.

Imported products will be taxed when they are cleared for home consumption and locally manufactured products will be taxed at source.

SBL returns and payments can be submitted electronically through SARS e-Filing and will also be accepted at Customs and Excise branches.

Licensing and registration of manufacturers of sugary beverages will take place from February 2018. Only commercial manufacturers that produce sugary beverages with a total annual sugar content in excess of 500 kg per year need to be licensed and pay the SBL. Non-commercial producers below this threshold will be expected to register but will not be subject to the SBL.

The levy is fixed at 2.1 cents per gram of the sugar content that exceeds 4 grams per 100ml, which means the first 4 grams per 100ml are levy free. The levy is part of government’s programme to prevent and control non-communicable diseases (NCDs) and assist in the prevention and control of obesity.
SARS will engage industry stakeholders during roadshows to guide them through the process.

Have you considered the information and data implications for your business that will enable you to comply from 1 April?

For more information or assistance feel free to contact Kayn Woolmer at WTS South Africa at kayn@wts-southafrica.com

 

Deadline for Provisional Taxpayers is 31 January 2018

Deadline for Provisional Taxpayers is 31 January 2018 The South African Revenue Service (SARS) reminds individual provisional taxpayers that the deadline to submit their annual income tax returns (ITR12) through e-Filing is 31 January 2018. Late submission could lead to penalties being charged. A provisional taxpayer is any person who receives income (or to whom […]

South African Revenue Service (SARS) proposed amendment to section 10(1)(ii) of the Income Tax Act No 58, of 1962