South Africa: Proposed clarification of tax measures for mining sector in budget 2022

Amendments proposed to be effective for years of assessment ending on or after 31 March 2023

Proposed clarification

The budget 2022 would, as part of the corporate income tax restructuring process, put into place certain measures aimed at broadening the tax base, while the corporate income tax rate would be reduced to 27% (from 28%). These amendments are proposed to be effective for years of assessment ending on or after 31 March 2023.

One measure that limits the assessed losses that are set off against taxable income to 80% of taxable income could result in a company with an assessed loss greater than the taxable income of having to pay tax on 20% of its taxable income. The government intends to clarify the anomaly between the new assessed loss restriction provision and the redemption of capital expenditure.

Another measure aims to increase the tax base by strengthening the rules with respect to interest limitations. The government proposes to clarify whether the provision regarding a capital expenditure for a non-producing mine applies to interest that is capitalised.

Read a February 2022 report [PDF 196 KB] prepared by the KPMG member firm in South Africa

 

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