Hon Deputy Speaker and hon members, the Taxation Laws Amendment Bill, 2013, and the Tax Administration Laws Amendment Bill, 2013, amend existing tax legislation, and complete the tax legislative changes arising from the tax proposals announced in my 2013 Budget Speech. Tax legislation dealing with annual rates and monetary amounts was passed earlier this year.
Expected tax revenues for the 2013-14 year are projected to be R895 billion, which is R3 billion lower than previously projected. Personal income tax and corporate income tax collection in the first half of the fiscal year have shown resilience in the face of slower than anticipated economic growth. Revenue collections for the first six months of the year have grown by 9,5% compared to the same period in the previous year.
The changes in the Taxation Laws Amendment Bill, 2013, and the Tax Administration Laws Amendment Bill, 2013, focus on promoting investment and economic activity; simplifying processes and administration in order to decrease the costs of doing business; putting local businesses on an equal footing with foreign competitors; and encouraging individuals to save and to preserve these savings for retirement.
Insofar as business is concerned, this Bill introduces measures that contribute to a climate that seeks to encourage economic growth and competitiveness through private sector investment and employment creation. Achieving this requires policy certainty and a favourable business environment where investors can see the benefits of participating in the South African economy.
Amendments to the tax legislation seek to provide more certainty for companies wanting to make use of the research and development tax incentive to make spending on innovation attractive. A more favourable regime for shipping companies has been introduced, and new incentives are offered to attract and encourage investment in special economic zones and existing industrial development zones. Tax amendments have been put in place to make it easier for foreign companies who want to invest in Africa and use South Africa as their regional headquarters, thereby enhancing South Africa's reputation as a gateway to Africa.
The value-added tax, VAT, registration process is being simplified for local businesses, in particular small businesses, to streamline administration and decrease business costs. At the same time, some businesses have been increasing their innovativeness with tax planning and, while we want to encourage businesses to invest and grow our economy, we need to clamp down on activities that are solely aimed at reducing the corporate tax base.
As a developing country with a high level of inequality, it is important to ensure that corporates contribute a fair share to the fiscus so that government can continue to fund infrastructure projects and social programmes that are core components of the National Development Plan.
Base erosion and profit shifting is a global issue that is being tackled at a global level. South Africa, along with many other countries in the Organisation for Economic Co-operation and Development and the G20, is taking steps to address it. In doing so, measures have been put in place to restrict excessive debt deductions and bring e-commerce into the VAT base.
In respect of individuals, our low savings rate is a serious concern and it puts many households in a vulnerable position. These households find themselves with inadequate savings to meet their own spending needs and run the risk of living a life of poverty in retirement.
The measures provided for in the Bill specifically target the preservation of these retirement savings to protect individuals who may be most at risk in the future. Individuals will no longer be allowed to withdraw the full value of future contributions to provident funds if they are below a certain age, thereby avoiding scenarios where individuals withdraw their full pension before retirement and use these funds for frivolous consumption. The Bill, I must emphasise, will protect the rights of current members, while enhancing the regime to create a more sustainable savings environment in future.
The taxation of retirement contributions has also been significantly simplified and the available deductions expanded to encourage further savings.
The Bills strike a careful balance between tax relief measures on the one hand and protecting the tax base on the other hand.
I wish to thank members in anticipation for their support of the Taxation Laws Amendment Bill, 2013, and the Tax Administration Laws Amendment Bill, 2013, and also thank the committee for its excellent work in processing these Bills. Thank you.