Accounting Professionintegral to unlocking SA Budget
CAPE TOWN, 23 February 2023Professional accounts will play an integral role in the development of innovative solutions for some of South Africa’s most pressing economic challenges.
This was the emphatic message coming out of an insightful Budget Tax Business Breakfast hosted by the South African Institute of Professional Accountants (SAIPA) on Thursday, following the Minister of Finance’s presentation of South Africa’s Estimates of National Expenditure or simply The National Budget, for 2023.
“I am encouraged by the many ways in which our profession can be a driving force in moving our economy towards the goals articulated in the Minister’s Budget and beyond,” said SAIPA CEO Shahied Daniels, in his introductory remarks. “As our profession grows in an ever-increasing importance to the success of our economy, I am honoured to be a part of charting our future role as Professional Accountants (SA) and Tax Practitioners (SA) in business, practice, academia and the public sector.
“To revive our country’s struggling fiscal health, it’s crucial to take a prudent approach to spending, maintain a robust tax system and manage debt wisely. As Professional Accountants (SA), we have the responsibility to combat tax evasion by refusing to participate in it, we are also at liberty to leverage tax incentives in the way they are intended by governments, which is certainly appropriate,” he said.
Mr Daniels emphasised that the role of the accounting profession will be to provide consistency and stability in economies, and to ensure that clients and employers are as tax competitive as possible, while complying with ethical principles and legal obligations.
The breakfast was attended by a combined in-person and online audience of about 320 SAIPA members and special guests at D’aria Estate. They had the opportunity to engage in a panel discussion featuring panelists Professor Walter Geach, , Professor Osman Molajee as well as Jashwin Baijoo and Ettiene Retief of the SAIPA CoTECOM (SAIPA Centre of Tax Excellence Committee)
The consistent message from these esteemed tax and finance experts was that although there were no remarkable announcements by the Minister, there is a need for the country’s tax system to continuously modernize in order to firstly improve collection from the existing base. Secondly, collected revenue needs to be directed towards meaningful programmes that drive entrepreneurship and job creation, thus expanding the tax base.
“One of the biggest misses of our taxation system is the excessive number of administrative burdens,” Geach said. “For instance, there are a number of next steps for the South African Revenue Service to be able to use third party data. While this suits big business, which has the infrastructure and resources, it does not work for small business, who are the job creators. Generally, instead of taking away and simplifying, we add to much to our systems.”
Retief said the tax system now needs to be updated to keep up with the new ways that people are working, so their tax claims process is more relevant to their businesses.
“Business has evolved, and with the ability to be mobile and access connectivity in an increased footprint of locations, the traditional office space doesn’t really work anymore,” he said. “Hence, we need to look at opportunities for finance to encourage and enable entrepreneurs in a more remote work scenario, altering our understanding of what investment means. With the services industry being a major driver of our economic growth, we need to focus our attention more on skills, rather than buildings.”
With foreign direct investment being a crucial key to our economy’s rejuvenation, Baijoo sees enormous opportunity to attract multinationals looking to South Africa as a launching pad into the rest of the continent.
“If we want to increase FDI to bolster our economy, we need to do a better job in showcasing the incentives in our tax code,” he said. “For instance, there are a number of income tax models in our system that multinationals can utilize to make them exempt from certain taxes. The problem is that these are severely underutilized, as they are simply not aware of them.”
Molajee added that while we can get our tax processes right, there are other steps we will need to take in order have a holistically attractive environment.
“It is very easy to do the wrong things,” he said. “But even if we do the right things from a tax perspective, there are considerations we need to take. For instance, foreign investors are concerned about how long it takes to access a work permit, the stability of interest rates, civil unrest, and other factors that may not fall into the ambit of the Finance Minister. To make a real impact in fostering entrepreneurship, investment, and job creation, we need to understand the all-encompassing climate that aspiring businesses, especially small businesses, will need to operate in.”