The National Treasury and the South African Revenue Service (Sars) have published, for public comment, the various draft taxation documents, including the proposed introduction of an export tax on scrap metals.
This follows after Trade, Industry and Competition Minister Ebrahim Patel issued a trade policy directive to the International Trade Administration Commission of South Africa (Itac) to look into appropriate amendments to the price preference system (PPS) guidelines, which can help address the shortage of good quality scrap metals.
Itac recommends an export tax rate of R1 000/t for ferrous metals, including stainless steel, R3 000/t for aluminium, R8 426/t for red metals and R1 000/t for waste and scrap metals.
In 2013, a PPS administered by Itac was introduced by Patel, regulating the export of ferrous and nonferrous scrap, by not allowing for the export of scrap metal unless it has first been offered to domestic consumers at a discount to the international price at the time of sale.
Patel previously explained that while the PPS had provided greater certainty of affordable scrap metal supply to the local industry, a policy decision had been taken by government to introduce an export tax on scrap metal.
Treasury and Sars published for public comment the 2020 draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill (2020 draft Rates Bill), the 2020 draft Taxation Laws Amendment Bill (2020 draft TLAB), the 2020 draft Taxation Administration Laws Amendment Bill (2020 draft TALAB) and the draft Regulations Prescribing Electronic Services.
These draft Bills are separate from the Covid-19 Tax Bills, which were introduced in Parliament on June 24, and deals with exceptional tax measures required to combat the pandemic.
The draft Tax Bills will be introduced in Parliament later this year. Treasury says it would normally engage with stakeholders through public workshops to discuss the written comments on the drafts, but owing to Covid-19, government will use other means and platforms of public engagements.
Key tax proposals contained in the 2020 draft Rates Bill include changes in rates and monetary thresholds to the personal income tax tables; adjustment of transfer duty rates to support the property market; and increases of the excise duties on alcohol and tobacco.
Key tax proposals contained in the 2020 draft TLAB include a proposed introduction of export taxes on scrap metals; tax measures required as a result of the modernisation of the foreign exchange control system; aligning the carbon fuel levy adjustment with the Carbon Tax Act; allowing a carbon tax “pass through” for the regulated liquid fuels sector; addressing an anomaly in the tax exemption of employer provided bursaries; and consequential amendments as a result of 2019 changes to section 72 of the Value-Added Tax Act.
Key tax proposals contained in the 2020 draft TALAB include amendments enabling the proposed introduction of an export tax on scrap metals; refusal to authorise a refund where returns are outstanding under the Skills Development Levies Act and the Unemployment Insurance Contributions Act; withholding of a refund pending a criminal investigation; and estimated assessments where relevant material requested by SARS has not been supplied.
The due date for public comments on the Bills is August 31.