The Minister of Finance Mr Pravin Gordhan, will present the Medium Term Budget Policy Statement (MTBPS) to Parliament on Tuesday 27 October 2009. The MTBPS restates the revenue and expenditure forecasts for the current and the ensuing two years and gives the first numbers for the fiscal year ending in March 2013.

The budget deficit which the Minister will announce on Tuesday will be the strongest signal yet of the economic policy direction in which President Jacob Zuma plans to lead South Africa. Although mainstream and progressive analysts agree Gordhan has little room for manoeuvre, the extent to which he is prepared to borrow or to tax will be read as a test of his commitment to the macroeconomic stability built up during Trevor Manuel's 13-year tenure at the Treasury. Gordhan consistently overachieved against Manuel's revenue targets while he was the Commissioner of the South African Revenue Service, but he will have to recast the three-year plan he inherited to take account of a drastically reduced income forecast. Spending is also likely to overshoot — possibly by as much as R20bn - R30bn, partly because the public sector pay settlements came in billions of rands higher than the Treasury budgeted for. The result is likely to be a deficit of 8% or more of gross domestic product.

Sadly Gordhan has to be the bearer of this bad news on Tuesday, but hopefully he will be the astute politician and remind his Cabinet colleagues that there are limited resources and that government cannot afford to keep pouring money into service delivery without getting a proper return.

Yours truly,
Stiaan Klue
Chief Executive

The economic downturn has had an effect throughout Africa, with more audits being carried out by tax authorities, a reluctance to waive penalties and an increasing focus on transfer-pricing rules.

Taxpayers have a right to request reasons in writing for decisions made by the Commissioner of the South African Revenue Service (SARS) according to section 32 of the constitution. Under rule 3(1)(a) of the rules governing objections and appeals promulgated under section 107A of the Income Tax Act, Act of 1962, a taxpayer is entitled to request reasons for an assessment issued by the Commissioner.

The chief executive, Stiaan Klue, was cited in Sake24 (16 October 2009)in respect of SARS' power to appoint an agent in terms of section 99 of the Income Tax Act No. 58 of 1962.

The chief executive, Stiaan Klue, was cited in Sake24 (26 October 2009)in respect of the Medium Term Budget Policy statement.

A new phishing scam has been brought to the attention of the South African Revenue Service. The scam involves emails purportedly from SARS sent to unsuspecting taxpayers informing them that they are due for a refund. To claim the refund the users are directed to a fictious website, which has been designed to look like the SARS website.

This ruling deals with whether companies, being associations of persons registered in terms of section 27 of the Co-operatives Act, No. 91 of 1981 (the Cooperatives Act), will be regarded as having taken steps to liquidate, wind-up or deregister under section 44(13) of the Act, given the provisions of section 41(4) which does not specifically mention co-operatives.

This ruling deals with whether the redemption or repurchase by a foreign collective investment scheme of the participatory interest held by a resident collective investment scheme, in terms of the rules of the scheme, will be a taxable foreign dividend.

This ruling deals with the taxability of income and capital gains in the hands of vested beneficiaries, whether a resident or not, where the income and capital gains were received by or accrued to a vesting trust.

This ruling deals with the income tax implications attendant upon the distribution of an actuarial surplus to former members, pensioners, and/or their beneficiaries subsequent to their retirement or death, or withdrawal or resignation from a pension fund, or the winding up of such fund and in consequence of the approval of the surplus apportionment scheme as envisaged in section 15B of the Pension Funds Act, No. 24 of 1956 (the PFA).

SARS issued issue 5 of Interpretation Note 9. The note provides guidance as to the application of the provisions of section 12E with reference to the requirements that have to be met in order to qualify as a Small Business Corporation (SBC).

SARS issued version 3 of the Public Benefit Organisation guide on 10 October 2009. The Guide has been prepared to assist non-profit organisations in the Republic to understand the tax implications affecting them with specific reference to income tax, donations tax, capital gains tax, estate duty, stamp duty, transfer duty, customs duty and skills development levy.

SARS and National Treasury will launch three new Bills, including the long awaited Tax Administration Bill, on Friday in Johannesburg. The other Bills are the Customs Control Bill and Customs Duty Bill.

As part of SARS's move towards modernising its processes and encouraging electronic interaction with taxpayers, SARS is phasing out cash as a method of payment at Taxpayer Services (TPS) branch offices with Cash Halls.

SARS announced in the Government gazette of 16 October 2009 that it is in the process of negotiation of an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with the Government of the Republic of Cameroon.

Senior tax policymakers and administrators met last week in Beijing to discuss how the tax system can best support and promote a healthy and transparent financial environment.

The report from the Commission to the Council and the European Parliament examines the use of the provisions on mutual assistance for the recovery of claims relating to certain levies, duties, taxes and other measures in 2005-2008.

This paper, prepared by Rana Roy, Consulting Economist, London, UK, addresses the scope for CO2-based differentiation in motor vehicle taxes, both under conditions of equilibrium and in the context of the current global recession.