Government is mooting an additional tax on foreign companies that sell electronic books, music and other digital goods and services in a bid to protect the tax base.
Finance minister Pravin Gordhan this afternoon announced in his budget speech that the economic turbulence SA experienced in the second half of last year has resulted in a revenue shortfall of R16.3 billion.
As a result, the budget deficit is now estimated to be 5.2% of gross domestic product in the current financial year, which draws to a close at the end of March.
"In the Medium-Term Budget Policy Statement, we noted that if the economic environment were to deteriorate, government would reassess its revenue and spending plans to secure SA's fiscal footing," said Gordhan.
SA's approach, as a result of the circumstances, involves several elements, including a curb on spending and the initiation of a tax policy review, said Gordhan. "Government is committed to remaining within the expenditure ceiling set out in the budget."
Included in the state's proposals are various measures targeted at protecting the tax base and limiting the scope for tax leakage and avoidance, said Gordhan.
Among these is a proposal that foreign businesses which sell e-books, music and other digital goods and services should be required to register as value-added tax vendors, said Gordhan. He said this is in line with regulations which have been adopted by the European Union and other jurisdictions.
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