GHANA 2018 TAX CHANGES

The Income Tax proposals presented by the Minister of Finance in the 2017/2018 Budget Statement of Ghana, has been assented by the President.

The Income Tax (Amendment) (No. 2) Act, 2017 pegs the tax-free income of a resident individual at the new national minimum wage of GHc9.68 per day which came into effect 1 January 2018.

Annual Personal Income Tax Brackets:

MOZAMBIQUE NEW SOCIAL SECURITY REGULATIONS

The new Regulation on Compulsory Social Security, Decree No. 51/2017, of 09 October has recently been published and enters into force 30 days after publication, which is 8 January 2018.

Highlights of the new regulation:

  • Employers registered with the INSS has an obligation to notify the INSS about changes in taxpayer / beneficiary data.
  • Foreign nationals working in Mozambique must provide documentary evidence that they are enrolled in a social security system in another country in order to avoid being obliged to contribute to Mozambique’s National Social Security Institute (INSS).
  • Monthly payments of contributions to the INSS can be made from the 20th of the respective month up to the 10th of the following month.
  • Interest arising from late payment of contributions increases from 1% to 2% for each month of delay.
  • An individual is entitled to the full old age pension benefits when they have completed 420 months of contributions, irrespective of their age. The previous legislation required 300 months.
  • An individual is entitled to partial old age pension benefits when they reach the retirement age of 55 for women and 60 for men and have contributed for at least 240 months. Previous legislation required 120 months.
  • The base for the calculation of the social security contributions include, but is not limited to, base salary, income replacement compensation, seniority and management bonuses, other bonuses, productivity and attendance rewards paid on a regular basis, overtime remuneration, subsidies, commissions and other benefits of similar nature paid on a regular basis.

NIGERIA 2018 BUDGET SPEECH HIGHLIGHTS

  • Nigeria has moved up 24 places from 169 to 145 on the 2018 World Bank’s ease of doing business ranking.
  • The 2018 budget deficit of about NGN2.005 trillion will be financed mainly through new borrowing of NGN1.699 trillion while the balance of NGN 306 billion is expected to come from the privatisation of non-oil assets.
  • Real GDP growth rate for the 2nd quarter of 2017 was 0.55%. The IMF projects a global growth of 3.7% for 2018.
  • There are no specific proposals to change, repeal or impose new taxes in 2018.

TUNISIA 2018 BUDGET PROPOSALS

The Tunisian Parliament has approved the budget for the 2018 fiscal year in December 2017.

It forecasts the budget deficit to fall to 4.9% of gross domestic product in 2018, from about 6% expected in 2017. Tunisia aims to raise GDP growth to about 3% from 2.3% in 2017.

The parliament approved a rise of 1 percentage point in VAT and imposed a new 1% social security tax on employees and companies.

Note: This contribution will be used to finance the social security funds.

The draft Finance Law 2018 was published by the Ministry of Finance and has been validated by a restricted ministerial council. The Finance Law provides for the revision of the Schedule of Income Tax for Individuals (IRPP) by a 100 basis point increase in the tax rate on each income bracket.

The new tax scale for 2018 is included in the draft budget law and will come into effect from 1 January 2018 upon approval and publishing of such approval.

ZIMBABWE 2018 BUDGET HIGHLIGHTS

Zimbabwe’s Minister of Finance & Economic Development, Hon. P. A. Chinamasa (M.P.), presented his 2018 budget statement to the Parliament on 7 December 2017.

The key proposals contained in the draft Finance Bill and highlights of the budget are as follows:

  • The Budget deficit for 2018, given total revenues available for Appropriation by Parliament of US$5.071 billion, and total expenditure and net lending of US$5.743 billion, translate to a fiscal deficit of US$672 million, representing 3.5% of GDP.
  • The 2018 Budget also contains administrative measures to improve administration of tax exemption for development partners funded projects.
  • A second tax amnesty has been proposed, expiring on 30 June 2018.
  • Several sections in the Income Tax Act which previously resulted in penalties and interest, are proposed to be repealed.
  • No income tax changes were proposed.

 

Contact our legislation team at info@crs.co.za if you require any additional information.

© 2018 CRS Technologies (Pty)Ltd. All Rights Reserved.

Occupational Injuries and Diseases Act: Maximum Earning amount increase

Department of Labour published Government Gazette notice no. 41382 on 16 January 2018 in respect of the increase in the maximum amount of earnings on which the assessment of an employer shall be calculated. The effective date is 1 March 2018.

The prescribed amount under Section 83(8) of the Compensation for Occupational Injuries and Diseases Act No 130 of 1993 (COIDA) has been increased to R430 944 per annum.

Currently, the maximum amount of earnings is R403 500 per annum.

 

Contact our legislation team at info@crs.co.za if you require any additional information.

© 2018 CRS Technologies (Pty)Ltd. All Rights Reserved.

The digital work environment requires organisations to think differently about how they overcome business challenges. Ian McAlister, General Manager of CRS Technologies, believes integrating once disparate functions is a step in the right direction.

Technology innovations have already seen a shift taking place in the corporate environment where companies are becoming more willing to adapt quicker to changing customer behaviour. But while a lot of attention is placed on developing more customised solutions for external users, this often comes at the expense of internal stakeholders.

Take human resources (HR) and payroll as an example. For too long, companies have viewed these as separate entities. HR was all about finding the right staff while payroll was a function of finance and needed to make sure people get paid on time. However, consider the business impact of integrating these two elements.

Success in unity

Utilising a centralised database that links HR with payroll opens opportunities for growth. By being able to access information from one database, decision-makers can more effectively match performance metrics to job functions and measure how well individual employees are meeting them.

It also reduces the administrative burden on departments by automating many elements of those business processes. Employees can, therefore, be empowered to take charge of things that previously had to go through one department or the other. These can include making leave forms and applications available online with approval processes happening in real-time. This lets employees see how many days’ leave they have available and what days others in the department have leave. This results in improved productivity as once manual functions are now streamlined using centralised systems.

Having such a unified database, therefore, provides the opportunity for increased self-service across a host of areas. Suddenly HR and payroll employees are not bogged down in administrative-heavy functions but can add strategic value to the business.

Transforming software

For too long, technology has been blamed for failures in either HR or payroll. Addressing this with an integrated system enables the business to focus more on the human element. It is not all about technological change but about embracing a new way of thinking in managing employees.

By fully linking HR, recruitment, payroll, and even talent management in this way, the business can ensure that its most precious resource – its people – are taken care of without any communication errors between departments getting in the way.

This provides the business with the platform needed for growth across other digital transformation initiatives. After all, there is no need to use multiple HR systems if companies can benefit from one, integrated database solution. This enables the end-to-end lifecycle of each employee of the workforce without having to duplicate work or lose sight of essential information.

Complying with legislation that governs director’s PAYE for executive payroll is a complex undertaking and it makes business sense to outsource this function — including being able to leverage expertise to tick all the governance boxes.
This is according to management at CRS Technologies, an established provider of solutions focused on the HR and HCM markets.
One of the reasons for the complexity is because a directors’ remuneration is often only finally determined towards the end of the tax year or even in the following tax year.
In some cases, directors may receive nominal monthly remuneration and a large bonus at the end of the tax year, resulting in the majority of their tax liability being owed at that stage.
This creates a challenge in determining the amount of PAYE to withhold each month. Typically, the director is required to work out a deemed monthly salary using the average remuneration earned during the previous year of assessment.
Sandra Maritz, legislation business consultant at CRS Technologies, explains that directors’ salary is subject to monthly PAYE and UIF deductions.
“This provision applies to directors of private companies and members and officials of close corporations who perform any functions within the CC, which are similar to those functions performed by directors of companies. Even ‘owner managed’ businesses where there is only one director and no employees, the sole director is deemed to be an employee per the Tax Act and his/her salary will be subject to monthly PAYE and UIF deductions and the business is also required to make monthly EMP201 submissions to SARS.”

Deemed remuneration
CRS Technologies emphasises the relevance of deemed remuneration, as determined by a SARS formula, to overcome issues with collecting monthly PAYE for directors.
The company says this applies to all directors, including members of CC’s, except if one of the following scenarios exists:
* The director’s remuneration in respect of the previous tax year has been finalised and more than 75% consists of fixed monthly payments.
* The director is newly appointed in the current year and wasn’t an employee of the company in the previous tax year.
* A person ceases to be a director but remains an employee.
Maritz points out that since the Taxation Laws Amendment Act, 16 of 2016, was signed into law on 11 January 2017, one of the many changes that the Act brings into effect is the repeal of paragraph 11C of the Fourth Schedule to the Income Tax Act, 58 of 1962.
The purpose of paragraph 11C was to provide for the unique circumstances presented in directors’ remuneration, whereby actual remuneration for directors would often be inconsistent and amount to ad hoc payments decided and approved from time to time.
“The provision is repealed effective 28 February 2017, which means that a new regime is introduced for deducting PAYE from directors’ remuneration effective for the 2018 tax year commencing on 1 March 2017. The new exception that now applies to directors’ remuneration is the same regime that has been applied throughout to regular employees, and these regimes can now be said to be aligned,” Maritz adds.
With the introduction of section 7B, dealing with “variable remuneration” in the Income Tax Act itself in 2013, policy in this regard appears to have changed with National Treasury.
If ‘regular’ employees need to account for PAYE on an ongoing basis on variable remuneration (also inconsistent) received, the need to differentiate between employees and directors would fall away and no policy consideration would be required.
There should be differentiation made between the PAYE treatment of variable remuneration received by employees in relation to directors’ remuneration.
Directors’ remuneration will likely not form part of “variable remuneration” as defined in section 7B, and therefore PAYE cannot be accounted for merely on an actual payment basis. PAYE should be calculated and paid over as and when remuneration accrues to an employee (with the exception of variable remuneration), and likewise to directors now too.
The director will always be taxed on actual remuneration received each month. The tax on the actual remuneration is compared to that which is calculated on the deemed amount and, if the latter is higher, the company pays the difference over to SARS.
In such case, the director must apply to SARS for a directive to reduce the monthly PAYE payable whereupon SARS will issue an IRP3(d) directive to reduce the amount of PAYE payable by the company.
CRS Technologies advocates outsourcing the executive payroll because, as Maritz explains, the administrative process can easily become complicated.
“This is just the tip of the iceberg… we have not yet touched on the concept of non-executive directors,” Maritz adds