COVID-19 tax relief options for businesses.

The President has announced tax measures to assist businesses and their employees through the difficult Covid-19 period. Tax relief measures include the fast-tracking of VAT refunds to help with cash flows. The president noted that to assist a greater number of businesses during the Covid-19 statutory lockdown, the previous turnover threshold for tax deferrals would be increased. National Treasury said that the move was expected to provide around R70 billion in support. The aim of the deferral of employees' tax and provisional tax payments is to ease the cash flow load in the short term so that businesses can pay their staff and suppliers. Tax compliant Small, Medium and Micro Enterprises with a turnover of up to R100 million, where it was previously R50m, can now defer 35 percent (previously 20 percent) of their employees' tax payment for the period of April to July without incurring penalties and interest. Further, tax compliant businesses with a turnover of more than R100 million will be able to apply to SARS to defer their employees’ tax and provisional tax obligations and this will be assessed on an individual basis. If you are unable to pay tax debts due to economic instability caused by the lockdown, you may request and enter into an installment payment arrangement with SARS, as you are required to pay the deferred amounts to SARS for six months starting from August 1. This means that the first payment would need to be made by September 7 with the employees' tax filing for August. A further avenue of relief may arise if SARS is satisfied that interest is payable on overdue tax as a result of conditions beyond the taxpayer’s control, which include a natural or human-made disaster. Situations may arise where interest is payable by taxpayers if they cannot pay their taxes on time due to Covid-19 and the lockdown.

Taxpayers who donate to the Solidarity Fund, set up to aid vulnerable South Africans, support initiatives that are set in place to contain the spread of Covid-19 in South Africa and drive the solidarity campaign, will also now be able to claim up to an additional 10 percent as a deduction from their taxable income.