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Individuals can’t deduct the 3% construction tax


You may know that certain persons are, per the Income Tax Act, required to deduct a 3% tax on payments made in respect of construction contracts. The 3% tax is a tax falling under a category of what is commonly referred to as Other-withholding taxes. A withholding tax (WHT) is a tax required to be deducted at source by the payer to the payee in respect of amounts arising from construction contracts.

Whilst the 3% tax is in most instances deductible by companies, NGOs and government departments, one question which is never clear is whether individuals who are not in business should also deduct the tax. This issue arises from the fact that the section of the Income Tax Act (hereinafter Act) requiring that the tax be deducted reads as follows, ‘Every person who makes any payment to any person under a contract relating to construction operations shall deduct tax from such payment.’ You see, the word ‘person’ includes even our 75 year old granny in the village who pays for construction contracts. So, I want to analyse whether individuals not in business should deduct the 3% tax. In this article, words importing the masculine shall be deemed to include the feminine.


The 3% construction tax is imposed by the Act on payments made in respect of construction contracts which are at least P 5 000 in value. I highlighted above that the Act states that the tax shall be deducted by every ‘person’ which implies that there are no exceptions. I will get back to this matter further below. On another note, the Act does not define construction contracts but it is common cause that the term includes, among others, the construction of the following: houses, office complexes, bridges, dams, tarred roads and sewerage works.

The payer of the amount charged on construction contracts is mandated by the Act to deduct the tax and remit the amount so deducted to BURS no later than the 15th day of the month following that of payment of the contractor. Failure to remit the tax to BURS within the stipulated time exposes the payer to an annual effective interest rate of 19.56% or compounded 1.5% interest per month or part thereof. Further, non-deduction of the tax makes the payer personally liable for the tax. You certainly don’t want to find yourself in such a situation; believe you me.


Now, let me get back to the main issue of today’s discussion, being that individuals who are not in business should ideally not deduct the 3% WHT. This is my view and you are free to disagree with it. My view is based on the points below:
Hard-to-tax: Individuals who are not in business cannot deduct this tax because they belong to a group of taxpayers who are by default, sworn tax evaders.

This group is commonly called the Hard-to-Tax. By nature, individuals do not volunteer to pay tax as their personal interests take precedence over tax laws. The fact that individuals can’t voluntarily pay their taxes explains why BURS, just like all tax authorities worldwide requires employers to deduct PAYE at source. If that were not the case, BURS would surely lose out as the majority of individuals not in business simply do not comply with taxes. Now, if this group of taxpayers can’t pay their own taxes, do you think that BURS would get anything if they were to deduct the 3% tax from other persons? They would simply squander the tax and play catch-me-if-you-can with BURS. This would be a losing game for the taxman.

 Impracticable: If individuals who are not in business were required to deduct the 3% tax, some of them could actually deduct the tax and then discover that there was no way of taking it to BURS. Practically, anyone who deducts such taxes should be registered for WHTs with BURS (i.e. have a WHT account). Most such persons should first be registered for income tax, implying that those who are not registered for tax would simply keep the tax at home and finally squander it.

If individuals not in business were to deduct the 3% tax, that would mean that every person in the country including those in the villages would need to register for WHT with BURS. Do you think that it would be practicable to require our aged mothers and fathers in the villages to register for tax, deduct the 3% tax and remit it to BURS?

That would simply be impossible. How many people on the streets, even those who are learned, understand that there is a section 57 and a Sixth Schedule in the Act which requires deduction of some 3% tax? Further, assuming that somehow tax knowledge was widespread such that everyone in towns and villages understood taxes, imagine how long the queues at BURS would be on the 15th of each month with individuals wanting to pay taxes. And also imagine how BURS would be inundated with cases of individuals who would deduct tax and never give the payee proof of payment of the tax in the form of withholding tax certificates (ITW 9s).

Exemptions for individuals: Whilst there is no specific exemption for payments made in respect of construction contracts by individuals not in business, other WHTs provisions such as on rent simply state that only businesses should deduct the tax. In other words, individuals not in business can’t be given a liability to collect state funds. So, the exact reasons that the legislature had in mind when he prescribed that tax on rent shouldn’t be deducted by such individuals should apply to those individuals deducting the 3% WHT. There is no difference between the principle of these two taxes; so technically, they should be applied uniformly.

Contra-fiscum principle: The contra-fiscum principle prescribes that where there is anything unclear in a taxing Act, the courts rule in favour of taxpayers. So, as stated above, there is no exemption on individuals not in business but again it is impracticable for them to deduct the tax and it is in such cases where the contra-fiscum principle applies. Effectively,  if such matters were to be laid before the courts, the taxpayers would win, i.e. they can’t be obligated to deduct tax, for the reasons stated above.

Well folks, I hope that was insightful. As Yours Truly says goodbye, remember to pay to Caesar what belongs to him. If you want to join our Tax Whatsapp group, send me a text on the cell number below. Jonathan Hore is the Managing Tax Consultant of Aupracon Tax Specialists and feedback can be relayed to or 7181 5836. This article is of a general nature and is not meant to address particular matters of any person.

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Export Processing Zones: How to Get SEZA to Sizzle

23rd September 2020
Export Processing Zone (EPZ) factory in Kenya

In 2005, the Business & Economic Advisory Council (BEAC) pitched the idea of the establishment of Special Economic Zones (SEZs) to the Mogae Administration.

It took five years before the SEZ policy was formulated, another five years before the relevant law was enacted, and a full three years before the Special Economic Zones Authority (SEZA) became operational.

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Egypt Bagged Again

23rd September 2020

… courtesy of infiltration stratagem by Jehovah-Enlil’s clan

With the passing of Joshua’s generation, General Atiku, the promised peace and prosperity of a land flowing with milk and honey disappeared, giving way to chaos and confusion.

Maybe Joshua himself was to blame for this shambolic state of affairs. He had failed to mentor a successor in the manner Moses had mentored him. He had left the nation without a central government or a human head of state but as a confederacy of twelve independent tribes without any unifying force except their Anunnaki gods.

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23rd September 2020

If I say the word ‘robot’ to you,  I can guess what would immediately spring to mind –  a cute little Android or animal-like creature with human or pet animal characteristics and a ‘heart’, that is to say to say a battery, of gold, the sort we’ve all seen in various movies and  tv shows.  Think R2D2 or 3CPO in Star Wars, Wall-E in the movie of the same name,  Sonny in I Robot, loveable rogue Bender in Futurama,  Johnny 5 in Short Circuit…

Of course there are the evil ones too, the sort that want to rise up and eliminate us  inferior humans – Roy Batty in Blade Runner, Schwarzenegger’s T-800 in The Terminator,  Box in Logan’s Run,  Police robots in Elysium and  Otomo in Robocop.

And that’s to name but a few.  As a general rule of thumb, the closer the robot is to human form, the more dangerous it is and of course the ultimate threat in any Sci-Fi movie is that the robots will turn the tables and become the masters, not the mechanical slaves.  And whilst we are in reality a long way from robotic domination, there are an increasing number of examples of  robotics in the workplace.

ROBOT BLOODHOUNDS Sometimes by the time that one of us smells something the damage has already begun – the smell of burning rubber or even worse, the smell of deadly gas. Thank goodness for a robot capable of quickly detecting and analyzing a smell from our very own footprint.

A*Library Bot The A*Star (Singapore) developed library bot which when books are equipped with RFID location chips, can scan shelves quickly seeking out-of-place titles.  It manoeuvres with ease around corners, enhances the sorting and searching of books, and can self-navigate the library facility during non-open hours.

DRUG-COMPOUNDING ROBOT Automated medicine distribution system, connected to the hospital prescription system. It’s goal? To manipulate a large variety of objects (i.e.: drug vials, syringes, and IV bags) normally used in the manual process of drugs compounding to facilitate stronger standardisation, create higher levels of patient safety, and lower the risk of hospital staff exposed to toxic substances.

AUTOMOTIVE INDUSTRY ROBOTS Applications include screw-driving, assembling, painting, trimming/cutting, pouring hazardous substances, labelling, welding, handling, quality control applications as well as tasks that require extreme precision,

AGRICULTURAL ROBOTS Ecrobotix, a Swiss technology firm has a solar-controlled ‘bot that not only can identify weeds but thereafter can treat them. Naio Technologies based in southwestern France has developed a robot with the ability to weed, hoe, and assist during harvesting. Energid Technologies has developed a citrus picking system that retrieves one piece of fruit every 2-3 seconds and Spain-based Agrobot has taken the treachery out of strawberry picking. Meanwhile, Blue River Technology has developed the LettuceBot2 that attaches itself to a tractor to thin out lettuce fields as well as prevent herbicide-resistant weeds. And that’s only scratching the finely-tilled soil.

INDUSTRIAL FLOOR SCRUBBERS The Global Automatic Floor Scrubber Machine boasts a 1.6HP motor that offers 113″ water lift, 180 RPM and a coverage rate of 17,000 sq. ft. per hour

These examples all come from the aptly-named site    because while these functions are labour-saving and ripe for automation, the increasing use of artificial intelligence in the workplace will undoubtedly lead to increasing reliance on machines and a resulting swathe of human redundancies in a broad spectrum of industries and services.

This process has been greatly boosted by the global pandemic due to a combination of a workforce on furlough, whether by decree or by choice, and the obvious advantages of using virus-free machines – I don’t think computer viruses count!  For example, it was suggested recently that their use might have a beneficial effect in care homes for the elderly, solving short staffing issues and cheering up the old folks with the novelty of having their tea, coffee and medicines delivered by glorified model cars.  It’s a theory, at any rate.

Already, customers at the South-Korean  fast-food chain No Brand Burger can avoid any interaction with a human server during the pandemic.  The chain is using robots to take orders, prepare food and bring meals out to diners.  Customers order and pay via touchscreen, then their request is sent to the kitchen where a cooking machine heats up the buns and patties. When it’s ready, a robot ‘waiter’ brings out their takeout bag.   

‘This is the first time I’ve actually seen such robots, so they are really amazing and fun,’ Shin Hyun Soo, an office worker at No Brand in Seoul for the first time, told the AP. 

Human workers add toppings to the burgers and wrap them up in takeout bags before passing them over to yellow-and-black serving robots, which have been compared to Minions. 

Also in Korea, the Italian restaurant chain Mad for Garlic is using serving robots even for sit-down customers. Using 3D space mapping and other technology, the electronic ‘waiter,’ known as Aglio Kim, navigates between tables with up to five orders.  Mad for Garlic manager Lee Young-ho said kids especially like the robots, which can carry up to 66lbs in their trays.

These catering robots look nothing like their human counterparts – in fact they are nothing more than glorified food trolleys so using our thumb rule from the movies, mankind is safe from imminent takeover but clearly  Korean hospitality sector workers’ jobs are not.

And right there is the dichotomy – replacement by stealth.  Remote-controlled robotic waiters and waitresses don’t need to be paid, they don’t go on strike and they don’t spread disease so it’s a sure bet their army is already on the march.

But there may be more redundancies on the way as well.  Have you noticed how AI designers have an inability to use words of more than one syllable?  So ‘robot’ has become ‘bot’ and ‘android’ simply ‘droid?  Well, guys, if you continue to build machines ultimately smarter than yourselves you ‘rons  may find yourself surplus to requirements too – that’s ‘moron’ to us polysyllabic humans”!

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