Refunds, deductions and deferrals – SA announces major tax breaks
It's a silver lining for businesses and individuals: Cyril Ramaphosa has got a plan to ease the tax burden on South Africans during this health crisis.
It’s not often the president rocks up on television to show-off a R500 billion war-chest. Tuesday night saw Cyril Ramaphosa take to the airwaves to explain how South Africa was going to fund its economic recovery efforts – as well as making several multi-billion rand interventions for businesses, he also unveiled a number of tax interventions.
How much South Africa will spend on economic relief
With incomes and revenue all but evaporated by the global health crisis and subsequent lockdown, the government have stepped in to cushion the blow. Around 10% of South Africa’s GDP will go towards alleviating the gloom, as our already-clapped economy enters into its darkest hour.
Ramaphosa, always the great orator, sent a rousing message to South Africans about “creating a new economy” based on fairness and justice. Certainly, these tax interventions show he’s ready to walk the walk.
Major tax breaks coming to South Africa
- There will be a four-month tax holiday for companies’ skills development levy contributions.
- All VAT refunds will be fast-tracked.
- A three-month delay for filing and first payment of carbon tax has been implemented.
- The proportion of PAYE payments that can be deferred will be increased to 35%.
- The previous turnover threshold for tax deferrals is being increased to R100 million a year.
- Businesses with a turnover of more than R100 million a year can apply directly to SARS on a case-by-case basis for deferrals of their tax payments.
- Taxpayers who donate to the Solidarity Fund will be able to claim up to an additional 10% as a deduction from their taxable income.
- These tax measures should provide at least R70 billion in cash flow relief or direct payments to businesses and individuals.
Tax interventions – fines for late payments may also be suspended
Ramaphosa also told the nation that businesses won’t face fines for late payments, providing they can prove that the global health crisis has impacted their operations:
“We’re now embarking on the second phase of our economic response to stabilise the economy… No penalties for late payments will be applicable if businesses can show they have been negatively impacted in this time. The finance minister will provide further details on the above and other tax-related announcements.”
President #Ramaphosa: No penalties for late payments will be applicable if they can show they have been materially negatively impacted in this period.— Presidency | South Africa ???????? (@PresidencyZA) April 21, 2020