Breaking new barriers

The Minister announced a Budget that provided tax relief of R10.5 billion, of which R7.7 billion was in personal income tax relief to individuals. There were several other significant announcements, including:

• A reduction in the headline corporate tax rate by one percentage point from 29% to 28%;
• The second phase of reforms to the secondary tax on companies (STC), culminating in the introduction of a final withholding dividend tax at shareholder level in 2009;
• A simplified tax package for very small businesses with an annual turnover up to R1 million;
• An increase in the compulsory VAT registration threshold from an annual turnover of R300 000 to R1 million;
• R5 billion in tax subsidies over the next three years to support the emerging industrial policy; and
• The introduction of an electricity levy of 2 cents per kilowatt hour.