South Africa's ports and rail infrastructure have long played a pivotal role in regional trade, establishing the country as a key gateway into Africa. However, challenges such as inefficiencies, management issues and underinvestment have impacted their performance, highlighting the need for renewed focus and investment to remain competitive with emerging markets.
Yamani Selana, an expert in our indirect tax, customs and international trade practice, observes that the consequences of our declining infrastructure are severe. From delayed shipments to supply chain disruptions, businesses face prolonged lead times, stock shortages, and rising storage fees. This inefficiency is eroding South Africa's trade competitiveness at an alarming rate.
Our once-formidable rail network, which efficiently moved goods from Durban to Malawi and Zambia, is now a shadow of its former self. Meanwhile, countries like Kenya and Mauritius are stepping in to fill the gap, and even Mozambique has the potential to emerge as a serious contender if it streamlines its operations.
If South Africa prioritises reforms in its port and rail operations, we can strengthen our position as an attractive destination for foreign investment. This is essential for supporting key industries like manufacturing, mining and agriculture. Proactive measures will ensure sustainable economic growth and help us remain competitive in a growing global market.
Corporate Tax Policy – A Target on Business?
While the 2025 Budget did not introduce an increase in corporate income tax, several proposed amendments signal a shift towards more aggressive tax enforcement on businesses.
According to Nicky Combrinck, a senior associate in our tax practice specialising in international tax, National Treasury is tightening loopholes, with a particular focus on areas such as corporate group relief provisions, hybrid funding structures and controlled foreign companies (CFCs). One of the most significant changes is an amendment to Section 42 of the Income Tax Act, which affects asset-for-share transfers. Treasury is also targeting foreign pension schemes, potentially eliminating long-standing tax advantages that many South African expatriates have relied upon.
The proposed changes raise an important question: Is the government prioritising revenue collection over fostering a pro-business environment? Businesses are already grappling with high operational costs, regulatory red tape and economic uncertainty. Adding complex tax amendments to the mix could further discourage investment and expansion.
South African policymakers must strike a delicate balance—ensuring tax compliance without stifling economic growth. Failure to do so could lead to capital flight, as businesses seek more stable jurisdictions.
The impending shift in South Africa's transfer pricing and wealth taxation
Transfer pricing remains a contentious issue in South Africa's tax landscape, and the 2025 Budget has made it clear that enforcement is set to tighten. Thabiso Montsho, a director in our tax and transfer pricing practice, underscored the increasing scrutiny on profit shifting, dual pricing models, and agency function structuring within multinational groups.
One of the most debated topics in the webinar was the concept of industry-specific tax policies. Montsho argues that by categorising businesses into sectors, Treasury could introduce a more targeted approach to tax collection, reducing the need for a blanket wealth tax. This proposal raises the question: Could industry-based tax adjustments replace broader wealth taxation policies?
A sector-based tax approach could ensure that those benefiting most from economic concessions—such as high-net-worth individuals and capital-intensive industries—contribute proportionally. However, the challenge remains in defining these categories without creating unintended loopholes.
As South Africa's fiscal demands grow, businesses must brace for a more aggressive tax environment. The conversation is shifting from broad tax policies to highly targeted fiscal interventions. Those who fail to adapt may find themselves on the wrong side of regulatory compliance.
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