News in South Africa 12th February:
1. Budget Speech incoming:
Budget Speech season is here and based on Finance Minister Enoch Godongwana’s mid-term presentation, we can expect many complex challenges to be unpacked.
Godongwana has projected that the government will miss its revenue targets by nearly R57 billion for the 2023/24 tax year, and then by a further R54 billion for the 2024/25 financial year.
As a result, Godongwana has made it clear that South Africans should brace for financial challenges – including a weaker economy and less government spending.
It is not all negative, however, and leading financial software provider Sage is expecting to see several good news stories from Budget Speech 2024.
Below is a summary of the pressing topics Sage expects to be discussed.
The good:
- Minimal PAYE increases
- Diesel refunds for smaller generators
- Solar energy rebates
The bad:
- NHI delays
- Fuel levy increases
- More borrowing
2. Foreign employers tax changes:
As of the end of 2023, foreign employers must register as “employers” with the South African Revenue Service (SARS) – meaning they’re now mandated to withhold and pay PAYE.
This is according to consultancy firm PwC, which warned affected firms that this is a notable change that needs to be addressed to avoid non-compliance.
“There has been a significant change (effective from 22 December 2023) to the employment withholding tax (PAYE) responsibilities of a foreign employer who conducts business through a South African (SA) permanent establishment (PE).
“Such foreign employers are now required to register for and withhold PAYE,” said PwC.
Before the amendment, a foreign employer with no ‘representative employer’ in South Africa with the authority to pay remuneration need not deduct PAYE from the amounts it pays to South African employees as these individuals will pay the income tax due as provisional taxpayers.
However, in the February 2023 budget, the National Treasury proposed to align provisions on foreign employers to ensure consistency between resident and foreign employers, which is now the case.
According to PwC, the amendment now requires that every non-resident employer who:
- Conducts business through a South African Permanent Establishment; and
- Pays or becomes liable to pay any amount by way of remuneration to any employee must withhold and pay over PAYE to the South African Revenue Service (SARS).
It is important to note that the amendment only affects a foreign employer’s PAYE obligations.
Their obligations with respect to the Skills Development Levies (SDL) and Unemployment Insurance Fund (UIF) obligations remain the same as before, i.e.:
- UIF – All employers and employees must pay UIF unless a specific exemption applies (e.g. in the private sector, where employees are employed for less than 24 hours in a month).
- SDL – All employers are required to pay SDL on remuneration payable to all SA-based employees unless the total remuneration is expected not to exceed R500,000 during the following 12-month period.
“SA PEs of foreign employers should consider the new PAYE requirements to confirm whether they should register for and withhold PAYE from employees,” said PwC.
“The SA PE should also advise its foreign head office of the broad application of the new PAYE requirements, i.e. that a PAYE obligation can arise where the employer employs a South African resident in a foreign jurisdiction or where an employee of the company exercises his / her employment (independent from the SA PE) in SA,” it added.
PwC warned that the appropriate guard rails should be put in place to avoid non-compliance.
3. Meta platforms – source of scams:
Most scams reported to finance app Revolut in the UK last year started their journey on Meta Platforms social media, with most money lost to “get-rich-quick” investment schemes.
The London-based fintech found 60% of UK scam cases came from Facebook, Instagram and WhatsApp, dwarfing other platforms and frauds conducted by telephone. Revolut found a similar trend across Europe, where 61% of scams originated on Meta services.
Woody Malouf, Revolut’s head of financial crime, said Meta platforms were “being used as a hotbed for scams,” and urged Revolut customers to avoid so-called investment opportunities. “Banks and financial institutions should be the last line of defence, not the only line of defence.”
Malouf appeared alongside finance and technology executives this week at the UK’s home affairs committee in parliament, which is scrutinizing the surge in authorized push payment fraud. These scams trick customers into moving their money to accounts controlled by criminals and were responsible for almost £500 million in losses in 2022, according to the Payment Systems Regulator.
Starting in October, payment firms that allow fraudulent payments to be sent and received must reimburse victims, unless they can show they were grossly negligent.
The rule change will affect newer, smaller finance companies in particular. The PSR found Monzo, Starling and Metro Bank Holdings Plc were among firms with the greatest proportion of APP fraud, with over 100 frauds per million transfers sent.
Tech companies, meanwhile, signed a voluntary online fraud charter last year to try and block more scams from reaching customers. Starling and others have complained that Meta isn’t doing enough about the problem.
4. Downfall of Transnet:
The crises engulfing Transnet are nearly a carbon copy of what happened at Eskom, with the utility becoming synonymous with mismanagement, corruption, collapsing infrastructure, and criminal syndicates.
This feedback from Standard Bank’s chief economist, Goolam Ballim, when he outlined the severe domestic constraints on South Africa’s economy in 2024.
While Ballim thinks South Africa has turned the corner concerning load-shedding, he expects more attention to be paid to Transnet in 2024 as it becomes a more binding constraint on the economy.
There is a debate as to whether the impact of the collapse of South Africa’s rail infrastructure and port backlogs will have a larger negative impact on the economy than Eskom.
Ballim estimates that Transnet’s issues alone will cost South Africa up to 1% of potential GDP growth, with load-shedding having a slightly larger negative impact.
Transnet’s collapse has gone largely under the radar compared to Eskom. The economic impact of South Africa’s rail and port utility has only been quantified recently by the GAIN Group.
The collapse of Transnet is set to cost the country R1 billion a day in economic output, equivalent to 4.9% of annual GDP or R353 billion in 2023.
The Minerals Council of South Africa estimated that poorly run ports and freight-rail lines may have cost the country R150 billion in exports in 2022.
“Transnet is quite simply Eskom 2.0 for South Africa in terms of its impact and the scale of the crisis,” Ballim said.
Rail freight in South Africa has declined 35% in the last decade, while road freight has more than doubled as companies try to reduce their reliance on the ailing utility.
This has led to mining companies in South Africa being unable to export their commodities via local ports.
While it is possible to turn to ports outside of South Africa, such as Maputo, it is a costly exercise and economically unviable due to the decline in commodity prices.
5. Toll fee hikes:
The South African National Roads Agency (Sanral) has announced toll fee hikes that will kick in from 1 March 2024.
According to the group, toll tariffs will increase by 6.25%. This will take N1 “Platinum Route” toll fees for standard light vehicles to between R7 and R97, while the busy N3 route will see fees rise to between R20.00 and R94.00.
Sanral said the tariffs are adjusted annually in line with the Consumer Price Index (CPI) as obtained from Stats SA, noting that the 2024 hike is lower than the 6.58% adjustment in 2023.
The agency said that the toll revenue is necessary to maintain, operate and improve toll roads, as well as to service debt incurred to implement toll road projects.
“The funds go a long way towards ensuring that Sanral fulfils its mandate of delivering quality road infrastructure that adds value to the lives of South African citizens,” it said.
“Sanral is empathetic to the South African public, considering the current state of the economy. However, it is equally important to introduce the adjustments to ensure that the agency continues to deliver safe and quality roads to benefit all road users.”
The tables below outline the new fees for 2024, noting the following:
- Class 1: Light vehicles – with or without a trailer, including motorcycles, motor tricycles and motor cars.
- Class 2: Medium heavy – heavy vehicles with two axles.
- Class 3: Large heavy vehicles – heavy vehicles with three or four axles.
- Class 4: Extra large heavy vehicles – heavy vehicles with five or more axles.
N1 “Platinum Toll”
| Route | Plaza | Type | Class 1 | Class 2 | Class 3 | Class 4 |
| N1 | Stormvoel | Ramp | R12.00 | R29.50 | R34.00 | R41.00 |
| N1 | Zambesi | Ramp | R14.00 | R35.00 | R41.00 | R50.00 |
| N1 | N1 Pumulani | Main | R15.50 | R38.00 | R45.00 | R54.00 |
| N1 | Wallmansthal | Ramp | R7.00 | R17.50 | R21.00 | R24.50 |
| N1 | Murrayhill | Ramp | R14.00 | R35.00 | R42.00 | R49.00 |
| N1 | Hammanskraal | Ramp | R33.00 | R113.00 | R123.00 | R141.00 |
| N1 | Carousel | Main | R71.00 | R190.00 | R210.00 | R243.00 |
| N1 | Maubane | Ramp | R30.50 | R83.00 | R91.00 | R105.00 |
N4 “Platinum Toll”
| Route | Plaza | Type | Class 1 | Class 2 | Class 3 | Class 4 |
| N4 | N4 Doornpoort | Main | R19.00 | R47.00 | R55.00 | R66.00 |
| N4 | K99 | Ramp | R19.00 | R47.00 | R55.00 | R66.00 |
| N4 | Brits | Main | R19.00 | R66.00 | R72.00 | R85.00 |
| N4 | Buffelspoort | Ramp | R19.00 | R45.00 | R51.00 | R60.00 |
| N4 | Marikana | Main | R28.50 | R68.00 | R76.00 | R91.00 |
| N4 | Kroondal | Ramp | R19.00 | R45.00 | R51.00 | R60.00 |
| N4 | Swartruggens | Main | R97.00 | R242.00 | R294.00 | R345.00 |
N4 Gauteng/Mpumalanga
| Route | Plaza | Type | Class 1 | Class 2 | Class 3 | Class 4 |
| N4 | Donkerhoek | Ramp | R16.00 | R22.00 | R33.00 | R63.00 |
| N4 | Cullinan | Ramp | R20.00 | R32.00 | R48.00 | R81.00 |
| N4 | Diamond Hill | Main | R47.00 | R66.00 | R125.00 | R207.00 |
| N4 | Valtaki | Ramp | R37.00 | R52.00 | R76.00 | R172.00 |
| N4 | Ekansutria | Ramp | R29.00 | R44.00 | R61.00 | R123.00 |
| N4 | Middelburg | Main | R79.00 | R172.00 | R261.00 | R343.00 |
| N4 | Machado | Main | R118.00 | R329.00 | R479.00 | R685.00 |
| N4 | Nkomazi | Main | R89.00 | R182.00 | R264.00 | R380.00 |
N3 Joburg to Durban
| Route | Plaza | Type | Class 1 | Class 2 | Class 3 | Class 4 |
| N3 | Mooi | Main | R66.00 | R160.00 | R225.00 | R305.00 |
| N3 | Mooi | Ramp S | R46.00 | R112.00 | R157.00 | R213.00 |
| N3 | Mooi | Ramp N | R20.00 | R48.00 | R67.00 | R91.00 |
| N3 | Treverton | Ramp | R20.00 | R48.00 | R67.00 | R91.00 |
| N3 | Bergville | Ramo | R28.00 | R33.00 | R61.00 | R94.00 |
| N3 | Tugela | Main | R94.00 | R155.00 | R244.00 | R337.00 |
| N3 | Tugela East | Ramp | R58.00 | R96.00 | R143.00 | R198.00 |
| N3 | Wilge | Main | R88.00 | R151.00 | R201.00 | R286.00 |
| N3 | De Hoek | Main | R63.00 | R98.00 | R150.00 | R216.00 |
The gazette with the details of the above can be read here.
In addition to these main routes around Gauteng, tariff hikes for the rest of Sanral’s toll network can be found below.
These include the remaining tolls along the N1, N2, N3, N4, N17 and regional (R) routes.
All information sourced from articles posted by: DailyInvestor, Moneyweb and BusinessTech.
