Tax modernisation moves forward
Finance minister Ericah Shafudah this week presented proposed amendments to the Income Tax Amendment Bill to the Cabinet Committee on Legislation as her ministry pursues major changes to tax policy.
Following the tabling of the budget in late February, Shafudah said her ministry was committed to implementing proposed changes to tax policy, with the Income Tax Amendment Bill currently under legal scrutiny.
The planned amendments include adjustments to income tax brackets to reduce fiscal drag, a modernisation of the Value-Added Tax (VAT) Act, and amendments to the Petroleum Income Act.
"The tax amendments that I have announced have to be put into effect. I have to table the Tax Amendment Bill to the Cabinet Committee on Legislation, and I have to defend my Bill to that Committee," Shafudah said following a post-budget panel discussion held by Standard Bank and Market Watch/Business 7 this week.
In her budget statement, Shafudah said the government will maintain its commitment to implementing measures designed to stimulate economic growth. The Income Tax Amendment Bill is currently under legal review and is scheduled for presentation in the second quarter of 2026.
Planned tax reforms
Mooted changes include a review and update of depreciation allowance (capital allowance) rules to support business investment and economic growth. Accelerated capital depreciation allows businesses to deduct the cost of qualifying capital assets faster than under normal depreciation rules.
The government also intends to improve transparency and reduce tax avoidance through mandatory disclosure for aggressive tax planning, which should align with Organisation for Economic Co-operation and Development (OECD) standards.
An adjustment to income tax brackets is planned to reduce fiscal drag and improve fairness. An update to personal income tax rates and thresholds to ensure continued progressivity and adequacy of revenue over two financial years is earmarked as part of the amendments.
The Bill also makes provision for a review and update of tax incentives to ensure they deliver on intended investment and job creation under the planned special economic zone regime.
The Petroleum Income Act will also be amended to address new developments in the sector, whilst existing VAT legislation will be amended to support key priority sectors, such as agricultural input imports and the creative industry.
The modernisation of the VAT Act includes the implementation of e-invoicing to improve legislative clarity, enhance compliance, and reduce fraud.
A review of the Corporate Social Responsibility (CSR) contribution tax deduction and incentive is also being considered as part of the broader planned tax amendments, Shafudah announced.
