• 9 April 2020 – Notice No. R.458 in Government Gazette No. 43222Rule amendment to substitute Rule 24.03 to provide for the exemption of foreign-going ships or aircraft from the payment of duty on stores consumed on such ships in any port in the Republic, or on an aircraft on a flight between any places in the Republic for the duration of the national state of disaster. With retrospective effect from 23 March 2020.
• 8 April 2020 – Updated Frequently Asked Questions on Tax Measures
• 8 April 2020 – Media statement from Treasury – Call to Suppliers
  
  Due to the shortage of Personal Protective Equipment (PPE) to curb the spread of COVID-19, the National Treasury in support of the Department of Trade, Industry, and Competition (DTIC) calls on all compliant, particularly local, suppliers providing commodities listed below to direct their offers to the PMO set up for this purpose. The submissions will be assessed by the support team responsible for coordinating the process, exclusively for the identified commodities.
• 8 April 2020 – Disaster Management Tax Relief for Employees’ Tax, ETI and Provisional TaxThis video focuses on the Disaster Management Tax Relief for Employees’ Tax, ETI and Provisional Tax. Government has proposed certain tax relief measures aimed at alleviating cash flow problems during the COVID-19 outbreak. These Tax Relief Bills, includes tax relief for businesses in respect of provisional taxes, employees’ tax and an expansion of the employment tax incentive. The video is segmented into three areas focusing on the three main categories.
• 7 April 2020 – Explanatory Note – Transportation of Cargo (COVID-19)SARS has released an explanatory note to the Customs practice note about Transportation of Cargo issued on 6 April 2020.
• 6 April 2020 – Transportation of cargo (COVID-19) – Customs practice note (Updated – see the explanatory note issues on 7 April)
  
  Customs has clarified an amendment to the regulations published on 02 April 2020 aimed at easing escalating port congestion by providing for the “transportation of cargo from ports of entry to their intended destination, on condition that necessary precautions have been taken to sanitise and disinfect such cargo.” For more info, see the Customs practice note.
  
• 3 April 2020 – Goods qualifying for import VAT exemption under item 412.11 – COVID-19 measuresSARS wishes to clarify that “essential goods” as defined in Regulation R.398 in Government Gazette No 43148 of 25 March 2020, other than the goods mentioned below, are exempt from VAT on importation under item 412.11/00.00/01.00 to Schedule 1 of the Value-Added Tax Act, 1991, read with section 13(3) of that Act.Goods that are not exempt from VAT on importation are goods that the International Trade Administration Commission (ITAC) has indicated are:

1) dutiable (and no ITAC certificate under item 412.11 of Schedule No. 4 of the Customs and Excise Act, 1964, has been issued);

2) the subject of applications for duty support that are currently pending before ITAC; and

3) manufactured by domestic industry and ITAC has determined such industry is being or is likely to be injured by imports.

See the illustrative mapping of essential goods to their relevant tariff headings.

Goods excluded under 1) are those goods that are subject to an ordinary customs duty, as set out in Schedule No. 1, or trade remedies (anti-dumping, countervailing or safeguard duty), as set out in Schedule No. 2 to the Customs and Excise Act, 1964. A list of goods excluded under 2) and 3) is available. Click here for the ITAC import VAT certificate.

Goods that qualify for VAT exemption and are not dutiable fall under the certificate issued by ITAC in this regard and no individual applications need be submitted to SARS or ITAC.

Importation will follow the normal procedure described in the external policy SC-CF-55 – Clearance declaration external policy. The VAT exemption is only valid for direct importations and not to be cleared into bond or warehousing.  CPC A 14 must be used for importations from outside SACU and CPC A 12 for importations from the BLNS, with measure 412.11/00.00/01.00.

During the COVID-19 pandemic, SARS Customs has also set up a command centre to deal with escalations that may have not been dealt with at branch level. Your existing call reference number, transaction (SSM/LRN) can then be sent to osc@sars.gov.za. To save duplication and time, clients are reminded that queries must be sent to the relevant branch/processing centre.

• 3 April 2020 – Goods qualifying for a full rebate of customs duty and import VAT exemption under 412.11 – COVID-19 measuresImportation of supplies critical to the national state of disaster necessitated by the COVID-19 pandemic can be done free of duty and VAT into South Africa.Importers are required to apply to ITAC for a certificate to use that qualifies them to import under rebate item 412.11.

  Qualifying products referred to as “critical supplies” are listed on the ITAC website, as is the application form and the SOP.

  The importation of these goods will follow the normal Customs procedure described in the external policy SC-CF-55. The rebate item is only valid for direct importations and no bonded or warehouse clearances will be permitted under this rebate item.  CPC A 14 must be used for importations from outside SACU and CPC A 12 for importations from the BLNS, with measure 412.11/00.00/01.00.

  If requested to provide supporting documents to Customs, the client would need to upload the certificate issued to the importer by ITAC, along with the standard set of supporting documents to substantiate the import declaration.

  During the COVID-19 pandemic, SARS Customs has also set up a command centre to deal with escalations that may have not been dealt with at branch level. Your existing call reference number, transaction (SSM/LRN) can then be sent to osc@sars.gov.za. To save duplication and time, clients are reminded that queries must be sent to the relevant branch/processing centre.

• 3 April 2020 – Treatment of timeframes during period of national lockdownPlease Note that the Disaster Management Tax Relief Administration Bill, 2020 has been published on the SARS website for public comment.  The closing date for comments is 15 April 2020. In terms of proposed clause 5(2)(a)(i) of the Bill, certain time periods prescribed in terms of the Customs and Excise Act, 1964, are suspended for the duration of the national lockdown as defined in clause 1 of the Bill. The time periods that are not extended during the national lockdown are dealt with in clause 5(2)(a)(ii). In respect of these time periods, the current provisions of the Customs and Excise Act, 1964, will apply. Current provisions in terms of the Customs and Excise Act in relation to interest and penalties will continue to apply in respect of non-compliance.
• 3 April 2020 – Frequently Asked Questions on Tax Measures (will be updated on a regular basis)
• 2 April 2020 – COVID-19 Export Control RegulationSARS has been requested by the Department of Trade and Industry to add the listed goods to its prohibited and restricted list (P&R list) for purposes of export control. It is not a ban. Traders may apply to the International Trade Administration Commission (ITAC) for an export permit, and if granted the goods may be exported. See the Notice R.424 for more information.
• 2 April 2020 – Processing of Rules of Origin certificates during lockdown
  
  Customs clients submitting Certificates of origin, including: Form A, EUR1, SADC, MERCOSUR and AGOA, will continue to do so at their local branch as per communiqué dated 26 March 2020 (using an appointment process). However, clients in Durban and Cape Town are advised that Certificates of origin will only be processed during the lockdown period on the following days: Monday, Wednesday and Friday. A skeleton staff complement will be deployed to these two Customs hubs to assist on the abovementioned days for limited hours. Please note that receipt and collection of the certificates is to be done between 08:00 and 12:00PM on those three days only.The hubs are situated at:
  • Durban: Albany House
    61/62 Margaret Mncadi ave
  • Cape Town:  SARS Project 166
    22 Hans Strydom Avenue
• 1 April 2020 – Draft Disaster Management Tax Relief and Relief Administration Bill
  
  Following the media statement issued by the Minister of Finance on 29 March 2020 on Tax Measures to Combat the COVID-19 pandemic, the National Treasury and the South African Revenue Service (SARS) today publish, for public comment, the 2020 Draft Disaster Management Tax Relief Bill and the 2020 Draft Disaster Management Tax Relief Administration Bill. These draft Bills provide the necessary legislative amendments required to implement the COVID-19 tax measures. The measures contained in these draft Bills will take effect on 1 April 2020:
  • Media Statement: Publication of COVID-19 Draft Tax Bills for public comment
  • Draft Disaster Management Tax Relief Bill – 1 April 2020
  • Draft Disaster Management Tax Relief Administration Bill – 1 April 2020
  • Draft Explanatory Memorandum on the Draft Disaster Management Tax Relief Bill – 1 April 2020
• 31 March 2020 – Rebates for the manufacturing of hand sanitisersSARS Excise – SARS has published a streamlined temporary registration process for traders to register as rebate users in the manufacturing of disinfectants for the duration of the national state of disaster.
  • For more information, see the SARS letter COVID-19 communication – clarity regarding the use of ethyl alcohol in the manufacturing of hand sanitisers.
  • The process is documented in the Government Gazette No. 43156 No. R.411.
• 30 March 2020 – Small Business relief
  
  For Small Businesses in need of financial support during this difficult time, refer to the Debt Relief Finance Scheme offered by the Department of Small Business Development, click here.
• 29 March 2020 – The Minister of Finance announced exceptional tax measuresThe Minister of Finance has announced the following exceptional tax measures as part of the fiscal package outlined by President Cyril Ramaphosa on 23 March 2020 in his speech on the Escalation of Measures to Combat COVID-19. These measures are over and above the tax proposals made in the 2020 Budget on 26 February 2020. The tax adjustments are made in light of the National State of Disaster and due to the significant and potentially lasting negative impacts on the economy from the spreading of the COVID-19 virus. There is a critical need for government interventions to assist with job retention and assist businesses that may be experiencing significant distress:
  • Media statement: COVID-19 Tax Measures
  • Explanatory Notes on COVID 19 Tax measures
• 28 March 2020 – Letter to taxpayers regarding Debt SMS’s issuedDear Taxpayer, during these challenging times SARS continues to provide the essential service of collecting tax revenue that our Government more than ever before needs to deal with amongst others COVID19 & helping the economy. Many distressed taxpayers also anxiously await their refunds thus requiring SARS to continue its essential services.SARS confirms that an sms was issued today to taxpayers about amounts payable on 31 March 2020. SARS remains available to continue to provide essential service during this difficult time. Thanking you in advance & kind regards.
• 27 March 2020 – Clarity relating to processing of cargo and travellers during national lockdown periodAll borders of the Republic are closed during the period of lockdown, except for transportation of fuel and essential goods. On 25 March 2020, the Department of Transport issued a statement by the Minister of Transport, Fikile Mbalula. Click on the above link for more information on air, sea and land related points on cross-border movement of cargo and travellers.
• 27 March 2020 – SARS Contact Centre operating hours during lockdown
  • Weekdays: 9:00 – 16:00
  • Closed on weekends and Public Holidays.

Our contact numbers are 0800 00 7277 and for International callers: +27 11 602 2093.

• 27 March 2020 –  VAT exemption for essential goods on importation (29 March – Updated to reflect scope of customs duty rebate and 3 April – Updated with contact details)Due to the measures put in place under the Disaster Management Act 57 of 2002, “essential goods” as defined in Regulation R.398 in Government Gazette No 43148 of 25 March 2020 will be subject to a VAT exemption on importation during the COVID-19 pandemic, under Item 412.11/00.00/01.00 of Schedule 1 to the Value Added Tax Act 89 of 1991. A full rebate of customs duty under rebate item 412.11 of Schedule No. 4 to the Customs and Excise Act 91 of 1964 is available where ITAC has approved the rebate for the goods concerned.
  • Visit the ITAC website for information relating to the full rebate of customs duty under Covid-19 Rebate Item 412.11
  • Queries specific to classification may be addressed to Selloane Molebatsi at SMolebatsi3@sars.gov.za and Lmadileng@sars.gov.za.

• 26 March 2020 – Timeframe for the export of goods by vendors and qualifying purchasers affected by COVID-19
  
  Binding General Ruling 52 has been issued to address the Export Regulations and Interpretation Note 30 (IN 30) which prescribes the time periods to export movable goods, apply for a refund from the VAT Refund Administrator and obtain the relevant documentary proof of export. The Export Regulations and IN 30 respectively allow for an extension of the aforementioned time periods, where these periods cannot be met, because of circumstances beyond the control of the qualifying purchaser or the vendor. In light of the COVID-19 pandemic, and the measures put in place by the President of the Republic, regarding the pandemic, qualifying purchasers and vendors will have a difficulty in meeting the aforementioned prescribed time periods set out in the Export Regulations and IN 30.
• 26 March 2020 – Rebate Item 621.08 – Special conditions for certain recipients of partially or undenatured ethyl alcohol
  
  For the purposes of item 621.08, the special conditions shall apply to recipients and users of partially denatured or undenatured ethyl alcohol for the manufacture of disinfectant classifiable in heading 38.08 of Part 1 of Schedule No. 1 for the duration of the national state of disaster declared in terms of section 27(1) of the National Disaster Management Act, 2002 (Act No. 57 of 2002), by Government Notice No. 313 of 15 March 2020.
• 26 March 2020 – Arrangements for Customs services during lockdown and Customs Branch Managers contact detailsProcedures that SARS Customs has put in place during the period 27 March 2020 until 16 April 2020, focusing primarily on facilitating trade in essential services for Services at Customs offices, Registration, Licensing and Accreditation, Applications for Embargoes, Special Attendance, Degroup Removal in Bonds, etc. and Physical Inspections.
• 25 March 2020 – Letter to Taxpayers – Message from Commissioner Edward KieswetterDear Taxpayer,As you are aware, we are entering an unprecedented period in our history as a young democracy. It is a time in which we need to show social solidarity by taking care of ourselves and all South Africans.

  The President of South Africa Mr Cyril Ramaphosa has announced a nationwide lockdown with effect from midnight on Thursday 26 March 2020 in view of the escalating COVID-19 pandemic.

  Taking into account the devastating economic impact of this pandemic, the President also announced a number of measures to help tax compliant companies in distress and their affected employees, especially Small, Medium and Micro Enterprises (SMMEs).

  To give effect to the President’s lockdown instructions and to minimise face-to-face contact, I wish to inform you that SARS has taken a decision to ensure that alternative processes are in place so that you can engage with SARS, read more.

• 25 March 2020 – SARS Customs letter to Trade on the impact of COVID-19

During this lockdown period, SARS Customs wishes to advise you of the following:

• As an essential service, SARS Customs will continue to administer cross-border movement of goods at all land, sea, airports, and permissible travel in line with applicable restrictions.
• SARS Customs is putting in place measures to ensure uninterrupted rendering of Customs services, and the protection of our officers and clients.

SARS Customs will ensure that the following capabilities remain available throughout the lockdown period:

• Licencing and Registration for the manufacturing of essential products such as sanitisers. A central capacity will be created to process these applications;
• A minimum service capability will be available when required at all Customs offices;
• The processing of declarations will proceed as normal;
• Physical inspections of goods will continue as normal and priority will be given to essential goods. Other inspections will continue on an appointment basis;
• Border operations will proceed as normal with limited staff.

• 25 March 2020 – SARS Customs – positions of Neighbouring Countries Cross Border Movements in response to COVID-19

What you need to know	Botswana	Eswatini	Namibia	Lesotho	Mozambique	Zimbabwe
Are the borders open?	Yes, with restrictions. Extracts from their media statement: “Noncitizens should not be allowed except for those delivering essential commodities such as food, medical supplies, fuel, and agricultural supplies”	Yes, with restrictions. Extracts from their media statement: “ Following the announcement by the South African Government of a lockdown, Government (Eswatini) advises that only goods and cargo as well as returning citizens and legal residents will be allowed through our borders”	Yes, with restrictions. Extracts from their media statement: “South African Borders, including Air Travel to remain open to serve as points of entry for Namibians returning home and exit point for visitors from Namibia, and to facilitate trade between the two countries.”	Still awaiting announcement from Lesotho.	Yes, with restrictions. Extracts from their media statement: “ All travellers from all countries will be quarantined for 14 days (mandatory)”.	Yes, with restrictions. Based on communication with our counterparts: “Our borders will remain open for commercial business. There is a border closer for human traffic except for returning residents who will be quarantined for fourteen days”.
If yes, any basic important information necessary to know?	“Truck drivers in transit to other countries must be allowed in the country, however they will be subjected to specific quarantine protocols that would not hamper their transit”.	As part of the new measures to be introduced as from 27 March, “Non-essential travel between towns, cities and regions of the country is not permissible, except for medical reasons or to provide or acquire essential services. Transport of food and goods will be allowed”.	“A temporary travel suspension for 30 days for Namibians or Permanent Residents functionaries except for special cases with prior authorization with Ministry of Health and Social Services and Home Affairs and Immigration. Exceptional cases will include, persons seeking medical treatment, essential services like humanitarian assistance, truck drivers bringing food and other essential commodities, Namibians returning among others..”		As part of the new measures introduced as from 23 March, there will be “Suspension of all entry visas and cancel all those already issued”.

• 25 March 2020 – SARS Customs 12-13th Deferments Payment at the end of the financial year 2019/2020

Following the anouncement of the national lockdown and a teleconference held  with key Customs stakeholders this week, a decision was made to bring forward the 13th deferment payment for the 2019/20 financial year-end.

The statement period for this financial year (2019/2020) 13th deferment payment will now close 25 March 2020 at 17h00 and payment must be made by no later than 15h00 on Friday 27 March 2020.  The e-statements will be available as at 17h01 on 25 March 2020 for account holders who are on eFiling. Account holders not on eFiling will be emailed their statements by the respective branches. They will also be available for collection at the respective Customs Branches through prior arrangement.

• 20 March 2020 – SARS Customs – impact on the Registration of Cargo Reporters

This week SARS announced that it is taking measures to ensure the safety of its staff and clients, including encouraging social distancing and limiting the number of people visiting SARS offices. As a result, if Customs clients wish to register as a cargo reporter, instead of couriering their registration documents or handing them in at SARS head office in Pretoria, they are asked to scan them and mail them to NLegodi@sars.gov.za.
For queries, you can call 012-422 8388.

• 18 March 2020 – Suspension of Tax Mobile Units and Tax workshops

Due to the Novel Coronavirus (COVID-19) outbreak all tax workshops and mobile tax units have been suspended until further notice.

• 17 March 2020 – No need to go to a SARS branch, see our online services

Service offerings available on eFiling:

• Enquire on debt outstanding and make a payment
• Enquire on returns outstanding
• Tax Compliance Status
• Notice of Registration (IT150)
• Filing your Income Tax Return
• Update personal details (including Bank Details)
• Request Statement of Account
• Register for Income Tax (Completed by your employer on eFiling)
• Submission of Supporting Documents for an audit case

If you are not an eFiler, click here to register.

• 17 March 2020 – Letter to Trade – Impact of Corona virus on Trade and the list of closed ports

During President Cyril Ramaphosa’s address to the nation on Sunday night he declared a state of disaster and announced various measures to address the threat of the coronavirus. This included the closure of various ports of entry, including two sea ports and 35 land ports, as of 16 March 2020. The sea ports are Mossel Bay and Saldanha Bay, while the land borders are Alexander Bay, Sendelingsdrift, Onseepkans, McCarthys Rest, Middelpunt, Rietfontein, Gemsbok; Twee Rivieren; Bray; Mokopong; Mokghibistadt; Swartkopfontein; Derdepoort;Stockpoort; Platjan; Pondrift; Zanzibar; Pafuri; Giriyondo; Emahlatini; Bothashoop; Waverley; Nerston; Josefsdal; Kosi Bay; Onverwacht; Sani Pass; Boesmansnek; Tellebridge; Ongeluksnek; Ramatsiliso; Mononsthapass; Peka Bridge; Makhaleng and Sephaphusgate.

• 17 March 2020 – Message from the Commissioner, Edward Kieswetter, on the impact of COVID-19 on SARS Operations

Dear Taxpayers

By now you have heard and assimilated the announcement by President Cyril Ramaphosa on Sunday 15 March, where he declared a national state of disaster following the outbreak of the COVID-19 which has also been declared a pandemic by the Word Health Organisation (WHO).

The President calls on all of us as South African’s for an extra-ordinary response and as SARS we are taking this opportunity at all times to provide clarity and certainty to our taxpayers in how we move forward in terms of our service offerings.

As SARS, we have to balance the important work we do to collect revenue, facilitate service to taxpayers, travelers and traders, whilst at the same time taking reasonable measures to protect ourselves as SARS officials and yourselves as citizens of the Republic.

Following this, we will be adhering to strict general hygiene as well as social distancing to reduce the spread of the COVID-19.  We need to inform you of the following changes to our operations, read more.

• 08 March 2020 – Media release on SARS takes COVID-19 precautions at SARS branches and Ports of entry

PRETORIA, Sunday 8 March 2020 – South African Revenue Service (SARS) has announced that it has taken several precautionary measures in response to risk of infection from the Novel Coronavirus (COVID-19).

Commissioner Edward Kieswetter said SARS tax, customs and excise operations would continue as normal at all SARS branches, offices and ports of entry. These measures are aligned with and in support of other initiatives taken by the Department of Health.

All SARS branches will make hand sanitizers available to taxpayers who visit our branches. SARS will also ensure that all working and service areas that are most frequently touched are kept clean with specialized detergents. Information will also be shared with taxpayers on basic steps to prevent the spread of COVID-19.

In addition, the SARS Commissioner said that, “In the past few weeks, SARS has made available it’s person protective equipment to Customs officials at all ports of entry, including masks, gloves as well as hand sanitizers in line with National Government Guidelines”.

SARS Customs officials will also be supported by health officials who will screen travelers entering South Africa.

SARS officials are also in contact with Customs authorities from neighbouring states to share information regarding the COVID-19 outbreak and steps to mitigate the risk of infection.

“I call on all taxpayers and traders to take note of the information available to take steps to protect their health and well-being. Our core message to our employees, as well as taxpayers, traders and travelers is to not panic, but to practice self-care and consideration to others.

“In this regard, to practice high levels of personal hygiene, especially to regularly and thoroughly wash hands; minimize handshakes and travel and remain indoors should they experience symptoms of flu.”

“We want to reassure all taxpayers, traders and travelers that SARS, along with other government departments, is playing its part in responding to the COVID-19 virus.”

SARS will provide further communiqués when necessary.

 

ARE YOU A REGISTERED EFILER?​		​Register for eFiling; and Check out the SARS TV channel on YouTube
	​	​Services on eFiling: Enquire on debt outstanding and make a payment Enquire on returns outstanding Tax Compliance Status (Application of TCS) Notice of Registration (IT150) Filing your Tax Returns Update personal details (including Bank Details) Request Statement of Account Register for Income Tax (Completed by your employer on eFiling) Submission of Supporting Documents for an audit case Lodge a Dispute Tax Product Registration (incl. Tax Number Registration) Tax Directive Management Lodge a complaint Username Retrieval and Password Reset

 

DOWNLOADED THE SARS MOBIAPP?​
	​	​Services on MobiApp: Enquire on debt outstanding and make a payment Enquire on returns outstanding (My Compliance Status) Notice of Registration (IT150) Register for Income Tax Filing your Income Tax Return (Current) Update personal details (including Bank Details) Request Statement of Account Submission of Supporting Documents for an audit case Correspondence Chat Bot Explore Social Media- Access to SARS YouTube Channel (Videos) Username Retrieval and Password Reset

Employers who have had to close their businesses due to the lockdown, and can’t afford to pay their employees, may apply for money from government to help pay salaries.

The Covid-19 Temporary Relief Benefit will cover a period of up to three months – during the lockdown, and also afterwards, if companies continue to struggle with their cash flow.

Companies will have to prove that their businesses have been severely damaged by the coronavirus crisis before they will get access to funding.

The payouts, called the special Temporary Employee/Employer Relief Scheme (TERS) and administered by the Unemployment Insurance Fund, will work on the same principal as maternity benefits. If a company can still afford to pay employees a part of their salaries, the TERS money will “top up” these payments – but employees can’t earn more than 100% of their current salaries.

The amounts paid will be a percentage of an employee’s salary, according to a legislated sliding scale from 38% (highest earners) to 60% (lowest earners).

The sliding scale stops at R17 702: All workers earning more than this will only get the 38% maximum benefit, which is R6 730 a month. (Previously Cosatu interpreted the gazetted regulations that the maximum payout would be R17 712 a month, but new stipulations from the UIF indicate that this is wrong.)

Companies who are struggling to pay salaries due to the coronavirus crisis, need to report this per email to Covid19ters@labour.gov.za. They will receive an automatic response outlining the application process.

Each company will be judged on its own individual merits before the Covid-19 Temporary Relief Benefit will be extended to them.

Companies need to be registered with the UIF already to secure payments for their workers. But the normal UIF rule that employees would accumulate one day’s payout  for every four days’ work (up to certain maximums) will fall away for this benefit. All workers at approved companies will be entitled to these payments.

Last week, new wage payment regulations were gazetted for the clothing sector. According to those regulations, the UIF and employers will take turns to make weekly wage payments to employees during the lockdown.

More of these industry arrangements by bargaining councils are possible, which will vary from the normal TERS regulations, says Jan Truter, director of the labour law advisory platform Labourwise. The UIF has systems in place whereby UIF funds will be released to the bargaining councils, which can then be released to employees on a regular basis during the lockdown period.

The UIF has assets of about R180 billion and both Cosatu and Business Unity South Africa have pressured government to use the money to help workers in need.

Click to download

Media statement – COVID-19 Tax Measures

Explanatory Notes on COVID 19 Tax measures – 29 March 2020

I get a lot of questions from people asking how they can efficiently invest in tech shares. Most private investors want an easy way to access the tech sector without having to do too much research. Naturally, no one wants to lose money and so people are also looking for a way to manage their risks when buying tech shares. I think many of the good tech companies are expensive so I would be cautious about taking big bets on a handful of tech shares. However, there is merit in the tech sector so I think the answer might be an ETF or fund that spreads risks across a range of different tech companies.

The importance of dividends

Any value investor with experience in the stock market will tell you that dividends are a critical part of generating long term growth from shares. As an example, if you had invested $10,000 in the US stock market from 1926 to 2007, your capital would have grown to $1.2m. However, if you had re-invested the dividends, your capital would have been $33.1m. Dividends are possibly the most important factor in an investment decision. Part of the reason that dividends are so important, is because it is impossible for crooked CEO’s and management teams to lie about dividends. Our recent history with companies like Steinhoff and Tongaat shows the danger of relying on the integrity of management teams at listed companies. Sometimes they are dishonest, but they cannot lie about their dividends – if they don’t have cash, they can’t pay dividends.

The importance of dividends poses a big problem for value investors who want to invest in tech shares because many tech companies don’t pay dividends. Investors in tech shares must rely on the promises made by charismatic CEO’s who might lie. Even if they are not blatantly dishonest, they might be consistently overly optimistic. As an example, I would not stake my life on a promised delivery date of a new Tesla model!

I am reluctant to invest all my money in shares that don’t pay dividends. That is one of the reasons I have avoided ETF’s that invest in the tech sector, especially those offered by some South African product providers. I am not comfortable with all the risks posed by potentially dishonest CEO’s…

You have some options

Fortunately for investors like me, there are now some nice ETF’s that allocate money to the tech sector but only to those tech companies that pay dividends. Standard & Poors have created a great index called the S&P Technology Dividend Aristocrats Index. The index consists of 34 dividend-paying companies including Microsoft, Nvidia, Apple and Oracle. Good ETF providers like ProShares now offer products that track this index.

NASDAQ also has an index of dividend-paying tech shares. The index is called the NASDAQ Technology Dividend Index, and First Trust offers an ETF tracker on this index. The index has 100 Technology and Telecoms dividend-paying companies.

Exercise care

I think many of the good tech companies are expensive and so I would prefer to own tech shares as part of a diversified portfolio. That means investing in the tech sector along with financials, pharmaceuticals etc. I think that multinationals have also embraced technology as part of their core functions and therefore investors would miss out on potential profits by ignoring non-tech shares. For instance, VISA does millions of transactions around the world every few seconds. It would be a mistake to view VISA as a financial services company only, it is a brilliant tech business too. In summary, if you are not keen on buying individual shares, consider a dividend-paying tech ETF that forms part of an overall portfolio. It could be as simple as buying the MSCI World ETF Emerging Market ETF + Dividend Tech ETF.

Africa’s largest mobile operator, MTN, on Thursday said it had raked in as much as R14bn in 2019 through the sale of noncore assets as part of its effort to raise R15bn in three years.

The group announced its asset realisation programme in 2019, which aims to simplify its portfolio, reduce debt and risk and improve returns.

“Following the completion of these transactions, MTN will have realised proceeds of approximately R14bn within the first 12 months of this programme,” said group CEO Rob Shuter. “Realising proceeds from simplifying the group remains a major strategic objective and we expect further progress in this programme in 2020.”

Following the disposal of its stakes in travel technology company Amadeus and online travel booking platform Travelstart, and the ATC loan of R2.1bn earlier in 2019, MTN said it has concluded two further transactions.

The operator has concluded an agreement to dispose of its 49% holding in Ghana and Uganda Tower Company investments to a subsidiary of American Tower Company for $523m (R7.3bn). This transaction is expected to wrap up in the first quarter of 2020.

Additionally, the group said MTN Nigeria has completed the redemption of its preference shares with MTN Group, receiving  $315m (about R4.4bn) in December 2019.

In its push to shed noncore assets, MTN has previously indicated that it will dispose of its stake in Africa’s largest online retailer, Jumia, which listed on the New York Stock Exchange in 2019.

MTN said it will dispose of its stake in Jumia, which is valued at $514.06m (R7.24bn), when the time is right as the company’s stock has so far faltered in US equity markets. After rallying as much as 224% in its first month of trading, the share price crashed 85% from its peak in May 2019 after a report by Citron Research released soon after the listing accused Jumia of fraud and described the company as “worthless”.

Now trading at $6.73 (R94.83) a share, the Nigeria-based business is trading well below its $14.50 (R204.31) opening price in April.

MTN’s share price was trading 1.47% higher in late-afternoon trade on Thursday at R83.70, despite revelations earlier in the week that the mobile operator was facing a lawsuit brought by attorneys representing US service members and contractors killed in Afghanistan. They are seeking damages as a result of the company allegedly violating US antiterrorism laws, saying the company paid “protection money” to the Taliban to secure its own infrastructure. 

JOHANNESBURG – The South African Revenue Service (Sars) on Monday said nearly half of companies in the country had no taxable income in 2017 while a quarter recorded a taxable loss.

Sars said its latest data highlighted the impact of weak economic growth.

The country’s growth has been forecast at 0.5% this year, which is a significant drop in what was previously predicted.

Sars said based on its 2017 data, 48.3% of companies had taxable income equal to zero and 27.4% reported an assessed loss. On the other hand, 24.3% had a positive taxable income.

Companies had up to 12 months from the end of their financial cycles to submit tax returns.

Sars said the decline could be largely be attributed to sluggish economic growth, structural challenges in some sectors of the economy, low confidence levels, and political uncertainty.

The tax collector said companies submitting returns fell to 36.9% – or just over two million for the 2018/19 fiscal year – partly due to many being considered “inactive or dormant”.

About 63% – or 572,000 companies – expected to submit returns complied.

The South African government has made significant changes to employment equity reporting requirements, according to Yolandi Esterhuizen, compliance manager at Sage Africa & Middle East.

She says the aim of the changes is to improve the accuracy and efficiency of collecting data about wage disparities between the highest and lowest paid employees. This could then enable the Department of Employment and Labour to identify wage gaps and to set benchmarks for different sectors.

“Employers must ensure that they have policies in place to deal with remuneration gaps and avoid unfair discrimination. If there are disproportionate differences in remuneration which are not justifiable, they need to take measures to progressively reduce such differences or face possible consequences in the years to come,” says Esterhuizen.

Major changes to be aware of:

Reporting individual remuneration

In the past, employers only needed to report the total remuneration of all employees within an occupational level, population group and gender.

The new form requires that employers report the total remuneration of the individual who is paid the highest remuneration in each of the occupational levels by gender and population group.

In addition, employers must report the total remuneration for the lowest-paid individual employee in the lowest occupational level in the business by population group and gender. Only active employees should be included.

Reporting remuneration of individuals will simplify the detection of wage gaps, according to Esterhuizen.

For example, one will be able to easily compare the total remuneration a company provides to the highest paid African female in senior management to the remuneration of the highest paid coloured, Indian or white males in the same occupational level.

The report must differentiate between variable remuneration – like bonuses and commission – and fixed remuneration, like guaranteed wages, salaries and benefits.

Examples of remuneration that would previously have been excluded might be certain types of shares and dividends.

Top and bottom 10%

Employers need to report the average remuneration received by the top 10% and bottom 10% of your employees. In addition, employers must declare the median earners’ total remuneration. The median is the “middle” value in a range of values and is different from merely calculating an average.

Employers will have to indicate the vertical gap between the highest paid and lowest paid employee, and whether the remuneration gap in the organisation is aligned with its policy.

Africa’s largest mobile operator, MTN, on Thursday said it had raked in as much as R14bn in 2019 through the sale of noncore assets as part of its effort to raise R15bn in three years.

The group announced its asset realisation programme in 2019, which aims to simplify its portfolio, reduce debt and risk and improve returns.

“Following the completion of these transactions, MTN will have realised proceeds of approximately R14bn within the first 12 months of this programme,” said group CEO Rob Shuter. “Realising proceeds from simplifying the group remains a major strategic objective and we expect further progress in this programme in 2020.”

Following the disposal of its stakes in travel technology company Amadeus and online travel booking platform Travelstart, and the ATC loan of R2.1bn earlier in 2019, MTN said it has concluded two further transactions.

The operator has concluded an agreement to dispose of its 49% holding in Ghana and Uganda Tower Company investments to a subsidiary of American Tower Company for $523m (R7.3bn). This transaction is expected to wrap up in the first quarter of 2020.

Additionally, the group said MTN Nigeria has completed the redemption of its preference shares with MTN Group, receiving  $315m (about R4.4bn) in December 2019.

In its push to shed noncore assets, MTN has previously indicated that it will dispose of its stake in Africa’s largest online retailer, Jumia, which listed on the New York Stock Exchange in 2019.

MTN said it will dispose of its stake in Jumia, which is valued at $514.06m (R7.24bn), when the time is right as the company’s stock has so far faltered in US equity markets. After rallying as much as 224% in its first month of trading, the share price crashed 85% from its peak in May 2019 after a report by Citron Research released soon after the listing accused Jumia of fraud and described the company as “worthless”.

Now trading at $6.73 (R94.83) a share, the Nigeria-based business is trading well below its $14.50 (R204.31) opening price in April.

MTN’s share price was trading 1.47% higher in late-afternoon trade on Thursday at R83.70, despite revelations earlier in the week that the mobile operator was facing a lawsuit brought by attorneys representing US service members and contractors killed in Afghanistan. They are seeking damages as a result of the company allegedly violating US antiterrorism laws, saying the company paid “protection money” to the Taliban to secure its own infrastructure.