BUSINES MAVERICK: Covid-19
Tax authority to take a hit as the government extends relief measures
While the latest round of tax-relief measures contains no freebies, there is a little something for everyone from tax holidays, fast-tracking of refunds and deferrals on the payment of carbon and excise taxes to temporarily expanding access to living annuity funds.
R70-billion. That is the full value of the second round of tax measures announced by President Cyril Ramaphosa this week.
The measures are a top-up to those announced in late March and are designed to provide additional support to businesses and individuals struggling to stay afloat as economic conditions worsen.
It had become apparent to government that businesses, both large and small are experiencing substantial cash flow difficulties from which they may not recover.
“National Treasury recognises that the short-term interventions announced in the first fiscal package do not go far enough in assisting businesses or households through the crisis – especially as the lockdown has since been extended,” a statement from the Treasury says.
The measures announced can be split into two distinct categories: those that provide additional liquidity (in effect interest-free loans) and are ultimately paid back to government and those that provide additional subsidies and result in lower tax revenue.
These can be summarised in the following table, but full details can be found here.
| Impact of COVID-19 tax measures:
|
Liquidity / interest-free loan (R billion)
|
Revenue cost (R billion)
|
| Expansion of employment tax incentive to pay up to R750 to all employees with an income below R6,500 per month
|
15 | |
| Deferral of 35% of PAYE liability for four months for businesses with expected gross income of less than R100-million
|
19 | 2 |
| Deferral of 35% of provisional tax payments for the next six months for businesses and the self-employed with expected gross income of less than R100-million
|
12 | 3 |
| Skills development levy holiday for four months
|
6 | |
| A 90-day deferral for alcohol and tobacco excise duty due to be paid in May and June
|
6 | |
| Three-month deferral for filing and payment date of carbon tax
|
2 | |
| Case-by-case application for deferral
|
5 | |
| TOTAL | 44 | 26 |
Assisting businesses now will ensure that South Africa’s economy is in a better position to recover once the health crisis starts to subside, National Treasury says.
“If businesses survive this testing time, the economy will be better placed to strive collectively towards economic growth that is inclusive (providing more opportunities for employment) and revenue-generating (so that we are able to work towards improving the state of our fiscus).”
The measures will be given legal effect in terms of changes to the Draft Disaster Management Tax Relief Bill and the Draft Disaster Management Tax Relief Administration Bill.
National Treasury says that it, together with the Commissioner for SARS, will continue to monitor developments and the need for any further requirements to assist with Covid-19 relief efforts. BM
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