[World Tax News] No deduction of fees paid to an accountant to file ITR and more
- Blog|International Tax|News|
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- By Taxmann
- Last Updated on 26 November, 2022
World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week.
1. South Africa announces plans to withdraw deduction of interest expense and remuneration paid for filing of tax return
On 15th November 2022, South African Revenue Services (SARS) announced its intention to withdraw the income-tax deduction allowed under Practice Note 31 of 1994 and Practice Note 37 of 1995.
The withdrawal is expected to apply to tax years commencing on or after 1st March 2023. SARS has proposed withdrawal for the following deductions:
(a) Interest paid on money borrowed
Practice Note 31 allows the deduction of interest expenditure in respect of interest income earned by carrying out a trade or venture. Interest paid on the amount borrowed, which is subsequently lent at a higher rate to make a profit, will qualify for the deduction.
This benefit is being abused, and transactions are being structured, so that non-qualified transaction are entitled to the deduction. The deduction was being claimed with no corresponding increase in income. Due to increased abuse of the provision, SARS plans to withdraw the exemption with effect from 1st March 2023.
(b) Fees paid to accountants, bookkeepers, and tax consultants for the completion of ITRs
Practice Note 37 allows the deduction of fees paid to accountants, bookkeepers, tax consultants, and other professionals for the completion of their tax returns. Taxpayers are entitled to the deduction if their income consists only of remuneration and/or interest and dividends.
However, due to the modernization of the e-filing system and the simplification of the process through which returns are filed, it is considered that such an exemption is no longer required. Thus, it is intended to withdraw this deduction.
Public comments are invited by the Revenue till 15th December 2022 on the above-proposed changes.
- Withdrawal Notification of Practice Note 31 and Practice Note 37
- Practice Note 31
- Practice Note No. 37
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