The Chamber of Mines said on Wednesday that it was worried by the budget’s revenue-enhancing measures which increased the dividend withholding tax rate from 15% to 20%.
Finance Minster Pravin Gordhan 2017 budget tabled in the National Assembly proposed an increase in the tax rate shareholders pay on dividends.
Gordhan said the dividend withholding tax rate would increase from 15% to 20%, which was expected to raise an additional R6.8 billion.
The Chamber said Gordhan’s new tax regime would probably have negative impacts on investment in the South African mining industry, but that it was looking forward to engaging with the National Treasury on offset and rebate measures.
“The combination or company tax and the dividend withholding tax raises the overall tax rate to above the Organisation for Economic Co-operation and Development (OECD) average, with potential negative impacts on investment,” said the Chamber in a statement.
“We also note the intention to take steps on the issue of a carbon tax. As we have done before, we urge great caution about imposing additional costs on trade-exposed carbon intensive companies which have little scope for reducing their carbon emissions based on their input mix or their production processes in the short to medium term.”
The Chamber said the industry, along with the rest of the country, had been pleased at the improved certainty of electricity supply in recent times.
It said also noted Gordhan’s comments on governance at state-owned enterprises, saying that it hoped to see improvements in this regard and was encouraged by the potential role he was for the private sector.
“We support the continued diversification of the supply base, including through contributions from independent power producer, as advocated in the speech.
The said the industry acknowledged Gordhan’s urging to employers to protect employees from the ravages of irregular emolument attachment orders against their earnings.
The Chamber also invited Gordhan and his tax staff to engage with us to hear our ideas and plans to address the issue in a manner that would not require additional taxes, saying it was committed to strengthening further the already strong globally-aligned systems that manage transfer mispricing and base erosion and profit shifting.
– African News Agency