SUSPENSION OF SECTION 45 OF THE INCOME TAX ACT WILL IMPACT NEGATIVELY ON BBBEE & TRANSFORMATION

While business supports the broader intention of the Draft Taxation Laws Amendment Bills to bolster inclusive growth and development, BUSA has serious concerns about the impact of the decision by the National Treasury to suspend section 45 of the Income Tax Act until December 2012, in view of the negative effect this will have on BBBEE transactions and transformation (see Business Day report).

This has generated a great deal of uncertainty, as many BEE transactions have been structured in terms of this section. The unintended consequences of the suspension of section 45 of the Income Tax Act have a serious potential of effectively terminating BBBEE deals.

The likely impact on some of the BEE deals implies that the changes could result in the BEE partners paying double or even triple tax charges.

We urge the National Treasury to reconsider its decision to proceed with this tax change until further consultation has taken place.

Statement issued by Masego Lehihi, PR and Communications Officer of BUSA, June 23 2011

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