CAPE TOWN - Finance Minister Tito Mboweni has announced the introduction of a tax subsidy to employers of up to R500 a month for the next four months for private-sector employees earning less than R6500 under the Employment Tax Incentive.
The minister said tax compliant businesses with a turnover of R50million or less would be allowed to delay 20percent of their employees’ tax liabilities over the next four months as well as part of their provisional corporate income tax payments, without penalties or interest over the next six months
The SA Revenue Service (Sars) would accelerate the payment of employment tax incentive reimbursements from twice a year to monthly to get cash into the hands of compliant employers as soon as possible.
This intervention is expected to help more than 4 million workers and about 75000 small-and-medium enterprises as the country deals with the impact of Covid-19.
“The tax adjustments are made in light of the National State of Disaster and due to the significant and potentially lasting negative impacts on the economy from the spreading of Covid-19.
“The measures will be given legal effect in terms of two bills to be tabled when Parliament re-convenes later this year for retrospective enactment. These bills are the Disaster Management Tax Relief Bill and the Disaster Management Tax Relief Administration Bill,” said Mboweni.
The measures come as South Africa is under a 21-day lockdown, which got under way at midnight on Thursday. To date, South Africa has recorded more than 1000 cases of the virus.
Mboweni confirmed that the government was considering getting aid from the International Monetary Fund (IMF), but stressed that this would strictly be to fight Covid-19 and nothing else.
“South Africa’s biggest crisis at the moment is the coronavirus effect. We have a health crisis and should we engage the IMF, it would for purposes of dealing with the coronavirus effect,” the minister said.
This was after investment rating agency Moody’s downgraded South Africa to junk status at the start of its 21-day lockdown.