HealthMin Submits to SIU Investigation Process; Tax Expert Warns of Corp Tax Cut Side-Effects

LOCAL NEWS

• HealthMin Mkhize says it is up to the SIU to complete its probe into allegations of irregular contracts awarded to his associates worth R82m. says he would make findings public as soon as they are available
• Tax Expert warns reducing corporate tax to 27% may have unintended consequences.
• Says to make up for lost revenue or achieve a revenue neutral corporate tax form, Treasury is considering limiting deductions on net operating losses and interest expenses.
• Under the current tax regime, interest payments on company borrowings is tax deductible because it is treated as an ordinary and necessary business expense.
• Crucially, the law allows companies to claim refunds on net operating losses. For example, if a company makes a R100 loss in one tax year, swings to a R10 profit the following year, it can carry that loss forward and submit the next tax return as a R90 loss and not pay tax.
• It's unclear how the limitation on the so-called assessed losses is going to look like but it could have unintended consequences crippling companies in industries such as aviation and tourism, which are expected to take years to return to pre-Covid trading levels.
• Furthermore, it could discourage entrepreneurs from starting new companies, which tend to suffer deep initial losses that take years to recoup.
• Trade Balance data 1200GMT exp at R21.0bn vs R32.0bn prior