Parts of South African officialdom seem bent on ignoring the bigger picture.
At the United Nations, South Africa has a Department of International Relations and Cooperation that cooperates with concepts that go directly against the South African Constitution.
At the State-owned South African Broadcasting Corporation, officials continue to steer the organisation against free speech, cocking a snook at the Independent Communications Authority of South Africa, plus a long list of other institutions offering it wise counsel.
Now, at mineral level, the Taxation Laws Amendment Bill is doing something similar.
Released earlier this month, the Bill contains two surprise amendments that muddy the mineral royalty taxation waters just as clarity is beckoning.
One of them seeks to reverse hard-fought symmetry regarding the timing of the submission of income tax and mineral royalty returns and the other makes estimating how much mineral royalty tax must be paid far more complex and burdensome.
Needlessly, both surprises emerge on the eve of the Davis Tax Committee’s next clarifying mining tax report.
One of the Bill’s proposed amendments cuts the submission of mineral royalty returns back to six months, down from the current 12-month submission timeframe, which was purposefully aligned to the submission date for income tax returns.
This amendment could impact on the timing of mineral royalty returns for joint ventures and partnerships and unfairly favour one class of taxpayer over another.
In the second amendment proposed in the Bill, taxpayers can be called on to justify royalty return estimates, with the commissioner for the South African Revenue Service (Sars) empowered to increase the estimate to an amount which the commissioner considers reasonable.
Both have caught the industry off guard and, instead of bringing further alignment, bring back old problems.
The timing of the proposed amendments could be seen as mischievous against the backdrop of the Davis Tax Committee recognising the need for legislative clarity on several mineral royalty aspects.
Granting powers to Sars to make its own estimate for provisional royalty payments is liberty taking.
Surely clarity should first be obtained on the various interpretational issues impacting on the mineral royalties tax before empowering the commissioner to make his own provisional estimates? Or is Sars using its commissioner’s increased powers to show the Davis Tax Committee who is boss?
Practical experience of mineral royalty legislation over the last six years has spewed interpretation issues that need to be made clear in the second draft of the Davis Tax Committee’s mining tax.
As Sars attended a session with the Davis Tax Committee on May 13 this year, it is clearly aware of the key areas of concern raised around the application of several legislative provisions of the Mineral and Petroleum Resources Royalty Act, 28 of 2008 (‘Royalty Act’), the Mineral and Petroleum Resources Royalty (Admin) Act, 29 of 2008, and the Mineral and Petroleum Resources Development Act, 28 of 2002.
So why muddy the waters further when you were present when every effort was directed at making them clearer?