Treasury announces additional tax measures to ease Covid-19 pressure
Johannesburg - The National Treasury on Thursday announced additional tax measures it said would provide around R70 billion in relief for businesses in light of Covid-19 related constraints, either through reductions in taxes or deferrals of tax payments.
Many South African businesses are struggling to stay afloat after the government imposed a five-week lockdown from March 27 to try and contain new transmissions of the coronavirus which has taken a heavy toll around the world since being first reported in China late last year.
President Cyril Ramaphosa's government has since eased some of the restrictions of the lockdown which was initially meant to end after 21 days on April 16 but was extended to the end of the month.
The Treasury said the government recognised that the lockdown measures were having a significant negative impact on the economy, with most households and businesses suffering a significant loss in income.
Finance minister Tito Mboweni on March 29 announced an initial set of tax relaxations to help businesses with cash flow and provide an incentive for firms to retain lower-income employees.
"Since the announcement, economic conditions have worsened, and National Treasury and SARS (South African Revenue Service) have received a large number of requests for assistance, including requests from large businesses that are also experiencing substantial cash flow difficulty," the Treasury said on Thursday.
"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."
Under the additional measures, the government will from May 1 give a four-month holiday for skills development levy contributions -- that firms operating in South Africa are compelled to make -- in order to ease businesses' current cash flow constraints, providing relief of around R6 billion.
Smaller value-added-tax vendors that are in a net refund position will be temporarily permitted to file monthly instead of once every two months, thereby unlocking the input tax refund faster. The Treasury said SARS was working towards having its systems in place for this.
Among numerous other measures, the government will also allow a three-month deferral for filing and the first payment of carbon tax liabilities, which were due by July 31. The Treasury said this would provide cash flow relief of close to R2 billion.
African News Agency (ANA)
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