Government is set to backtrack on certain clauses of the new Tax Amendment Act to appease Cosatu, the City Press reported.
Minister in the Presidency eff Radebe confirmed to the paper that government would in all likelihood move to postpone some of the law’s disputed points.
The law’s passed by Zuma at the start of the year updated laws passed in 2013 (in the 2013 Taxation Laws Amendment Act) that harmonised the tax treatment of contributions to retirement funds.
The 2013 law harmonises the remuneration base for tax purposes for all retirement funds, and consolidates both employer and employee contributions to reduce the scope for tax structuring.
This law should have been implemented on 1 March 2015, but was delayed by one year to take account of concerns raised by some stakeholders, including Cosatu.
The new law would enforce the annuitisation of two-thirds of provident fund savings from retirement. Currently, provident fund members are able to cash in their accumulated savings as a lump sum when they retire or resign.
Cosatu was not happy with the changes, particularly around pension reform, social security and what it said were a lack of consultations with Nedlac, and subsequently threatened to withdraw support for Zuma in the coming municipal elections if changes were not made.
Radebe said that the new laws would not be repealed, but certain aspects would be changed or could be removed.