We are living though one of the most dynamic times in the global tax landscape, and it comes as no surprise that taxation is high on the agenda of the next G20 summit, while the OECD spearheads the Base Erosion Profit Sharing (BEPS) project in an effort to clamp down on multinational tax dodgers.
Emerging markets are particularly vulnerable to the aftershocks of the global financial crisis. And according to Finance Minister, Pravin Gordhan, South Africa should prepare itself to face more challenging times ahead, further exacerbated by the low regard many developed countries hold for the economies of emerging markets.
Foreign direct investment (FDI) is under risk as international investors lose confidence in the South Africa’s economy in light of steady decline in the Country’s credit rating by the major Rating Agencies. In preparation for the lean years ahead, Government has planned to introduce a number of tax reforms and amendments in an effort to shore up loopholes, narrow the tax gap, increase tax collection and minimise tax avoidance. One of the major recent developments was the appointment of the Davis Committee whose mandate is to assess the tax policy framework and its role in supporting Government’s inclusive growth objectives and fiscal sustainability. The committee is due to release its first report shortly which is sure to attract high interest and should spark debate among all the industry stakeholders and general public.
The recently introduced Employment Tax Incentive (ETI) is a perfect example of Government engineering the workplace in its aim to address is the massive unemployment rate and low job prospects facing the Country’s youth. However the question remains whether the ETI is good tax policy, and what effect it will have on creating an environment conducive to attracting FDI.
In this background of rampant economic uncertainty, South Africa’s major professional associations have agreed to establish a platform for robust dialogue and debate on tax policy and administration. The Tax Indaba is scheduled for June and will function as a “round table” discussion with the purpose of bridging the gap between the tax industry, business and government. Topping the agenda is the aim to achieve wider consensus among stakeholders and industry professionals on what a sound tax policy should encompass, and whether there is a need for further reforms that would benefit the economic outlook and instil a culture of investor confidence.
There is heightened attention on issues such as mining taxes and carbon taxes, especially after the Australian Government recently repealed both. The Tax Indaba hopes to frame these proposed taxes in a South African context, and develop propositions to the relevant government departments on appropriate policy that will not harm FDI and investor confidence.
The International Institute for Research (IIR) has developed the agenda for the Tax Indaba which will be hosted by the leading accounting and tax law associations in South Africa at the Sandton Convention Centre. Partners have been drawn from the top professional bodies and associations in the tax industry, and include the Association of Chartered Certified Accountants ( ACCA), Association of Accounting Technicians, South Africa [AAT(SA)], Chartered Institute of Management Accountants (CIMA), Chartered Secretaries Southern Africa (CSSA), Institute of Accounting and Commerce (IAC), and the South African Institute of Tax Professionals ( SAIT).
Research Project Director, Charmaine Shangase from IIR believes the is an urgent need for this meeting of minds, “An organised and outcomes driven Indaba that includes all the major stakeholders is now required to ensure that policy debate raises out of merely the academic and confronts the issues with practical solutions.”
According to Stiaan Klue, Chief Executive of SAIT, “the balance between the tax professionals’ financial responsibility to maximise returns by employing tax exposure mitigation methods, and governments’ frustration over wide scale corporate and personal tax avoidance is becoming increasingly tenuous.”
Among the high profile speakers and industry experts already confirmed are;
Judge Dennis Davis, Chair of the Davis Committee on Tax Reform
Adv. Eric Mkhawane, CEO, Tax Ombud
Clem Sunter, scenario strategist
Prof. Jackie Arendse, tax professor
Mike Schussler, economist
Prof. Chris Evans, Professor, School of Taxation and Business Law Australian School of Business
Prof. Mathew Lester, Member of the Davis Committee on Tax Reform
Alvin Mosioma, Executive Director, Tax Justice Network- Africa (Kenya)
Keith Engel, former Director of Tax Policy at National Treasury
Dr. Beric Croome, Tax Executive, Edward Nathan Sonnenberg,
Ben-Schoeman Geldenhuys, Director, KPMG South Africa,
Adv. Leon J Bekker, Maisels Group,
Bill Joubert, Director, Deloitte,
Kyle Mandy, Head Tax Technical Director, PwC,
Dawid van den Berg, Director Head of Tax, BDO,
Dale Cridlan, Director, Norton Rose Fulbright South Africa,
Ernest Mazansky, Director, Werksmans Tax,
Johan van der Walt, Director: Tax, DLA Cliffe Dekker Hofmeyer