Minister of Finance Tito Mboweni announced a number of “exceptional tax measures” on Sunday as part of the fiscal package outlined by President Cyril Ramaphosa on 23 March 2020 in his speech on the Escalation of Measures to Combat COVID-19.
The measures will take effect from 1 April 2020.
These measures are over and above the tax proposals announced in the national budget in February. 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 the COVID-19 virus.
Due to a critical need for government interventions to assist with job retention and assist businesses that may be experiencing significant distress, a tax subsidy is introduced to employers of up to R500 per month for the next four months.
It is for those private sector employees earning below R6 500 under the Employment Tax Incentive and is expected to help over 4 million workers.
Furthermore, the South African Revenue Service is set to 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.
Tax compliant businesses with a turnover of R50 million or less will be allowed to delay 20% of their employees’ tax liabilities over the next four months and a portion of their provisional corporate income tax payments without penalties or interest over the next six months.
This intervention is expected to assist 75 000 small and medium term enterprises.
Treasury and SARS will also be considering additional exceptional adjustments to assist with COVID-19 relief efforts and to the tax treatment of newly formed funds in this regard.
Read more about the draft explanatory notes regarding the COVID-19 tax measures here.
* Compiled by Carin Smith