The flat tax rate of 33% applicable to Personal Service Providers will be reduced to 28%, without much reasoning from Treasury. The move to reduce the flat rate is welcomed, but seemingly carries no correlation to the marginal rate of tax for individuals which was unmoved at 40%. Given that the Personal Service Provider legislation is an anti-avoidance provision aimed at discouraging individuals from rendering services through incorporated entities one would have expected some link to the individual tax rates.
Written by Ruaan van Eeden, Tax Director, Cliffe Dekker Hofmeyr
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