A measured approach … Budget 2022

​​​Webber Wentzel’s Tax Team welcomed a balanced National Budget presented by Minister of Finance Enoch Godongwana on Wednesday.

Notable tax aspects which bring much-needed relief include the following.


  • A cut in the corporate tax rate from 28% to 27% for years of assessment ending on or after 31 March 2023.
  • A 4.5% inflationary adjustment to all personal income tax brackets, rebates and medical tax credits. There is also no increase to the personal income tax rates.
  • No increase in the fuel levy or the Road Accident Fund levy this year – this is the first time since 1990 there has been no increase.
  • The enhanced employment tax incentive (ETI), from ZAR500/pm to ZAR1 500/pm for the first year, and from ZAR 500/pm to ZAR 750/pm for the second year. Small businesses will also find it easier to qualify for ETI relief.
  • The extension of the R&D incentive to end-2023 is welcomed. Our clients have been querying the future of this incentive.
  • Section 24 of the Income Tax Act (ITA) providing for a debtors allowance to be claimed as deductions against income will be amended to include lay-by arrangements.
  • Despite some predictions that there would be an increase in interest withholding tax rates, VAT or capital gains tax inclusion thresholds, this did not happen – a welcome omission.
  • The proposed amendment to section 7B of the ITA to broaden the categories of variable remuneration, to cater for performance-based variable payments.
  • Allocation of R58.6 billion over the medium term for various social grants.

We welcome more certainty and clarity in tax rules through the following.


  • Clarifications and streamlining of rules on transfers from one retirement fund to another are a positive move.
  • Reconsideration of the adverse impact of the 2021 proposed amendments to "contributed tax capital" and "collateral arrangements" in the 2022 cycle.
  • Publication of a discussion document on the proposed tax treatment of receipts and accruals earned by collective investment schemes, which will be welcomed by the industry and investors.
  • Amendments to the Customs and Excise Act to allow for taxpayers to apply for advance rulings.
  • Amendments to the diesel refund notes and rules to take into account comments from industry-specific workshops as part of the overhaul of the diesel refund regime.
  • Clarification that the interest limitation rules in section 23M of the ITA will not apply to miners and their interest expense of non-producing mining operations.
  • Updating of the VAT regulations on the scope of "electronic services" in line with OECD developments.

Proposals to protect and increase the South African tax base and to improve compliance include the following.


  • No follow-up to last year’s proposal of a deemed retirement withdrawal tax for emigrants. Instead, National Treasury will be renegotiating double tax treaties with countries that have sole taxing rights on retirement benefits of emigrants from this year.
  • No mention of wealth tax proposals in this Budget, although all provisional taxpayers with assets greater than R50 million will be required to declare specified assets and liabilities at market values in their 2023 tax returns.
  • In the long term, the two-pillar solution to address the tax challenges arising from the digitalisation of the economy may be good news for South Africa and Africa as a whole. Ultimately, this is aimed at a reallocation of taxing rights from resident to source countries, as well as a 15% global minimum tax rate (both applying in respect of certain qualifying entities). We note that the targeted implementation date of 2023 is around the corner.
  • The restructuring of the corporate tax rate on a revenue neutral basis by limiting assessed loss deductions to a 80:20 split is a concern. If assessed losses equal or exceed current year income, tax is payable on 20% of that income. For miners, the assessed losses will be calculated before any capex deductions. We are concerned that many companies accumulated significant assessed losses in 2020 and 2021 during the Covid-19 lockdowns, and their ability to claw back those losses will now be restricted.
  • Amendments to the Tax Administration Act to allow SARS to conduct joint audits with foreign revenue authorities.
  • Vapers will inhale a flat excise duty rate of at least R2.90/ml to both nicotine and non-nicotine solutions.
  • Plans to reform the provisional tax regime, on which a discussion paper will be issued.
  • We had hoped for more flexibility for salaried taxpayers to claim deductions for home office expenses to have been implemented. Section 23(b) of the ITA is currently too narrow to provide any relief. We look forward to the discussion paper on remote working which the Budget promises to circulate this year.

Webber Wentzel > News > A measured approach … Budget 2022
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