Billions of rand in Covid-19 tax relief taken up by business
Businesses are using tax-relief measures put in place by the Treasury to help them with cash-flow problems arising from the Covid-19 lockdown, the Treasury says.
On Friday, the Treasury rebutted criticisms that little use is being made of the measures.
A number of economists grouped in the Economists Initiative suggested in a presentation to parliament’s two finance committees earlier last week that there had been little take-up of the relief.
However, acting head of the Treasury’s budget office Edgar Sishi said a presentation to the two committees on Friday that “there are movements taking place.”
The total tax-relief measures introduced to help financially distressed businesses and individuals cope with the lockdown are estimated to amount to R70bn, with a direct cost to the fiscus of about R26bn.
Preliminary data from Sars up to June 25 indicate that over 9,000 firms used the deferral of pay-as-you earn payments in April and over 7,000 in May, with the total relief for those two months totalling about R750m.
Exemption from payment of the skills development levy, which amounts to 1% of the salary bill, provided relief of R1,6bn. In terms of the relief measures a skills development levy holiday of four months from May 1 was provided to assist businesses with their cash flow. The relief is expected to cost the fiscus a total of about R6bn.
Deferrals in the payment of excise duty on alcoholic beverages and tobacco products and the fuel levy have so far amounted to R7,5bn.
The Treasury’s written presentation to the committees noted that there were 255 applications on a “case-by-case” basis for relief and of these 167 had been approved to the value of R1bn.
In terms of the announced relief measures, case-by-case applications could be made to Sars for the waiving of penalties for the late payment of taxes due to distress caused by the pandemic.
A total of 434 small, medium and micro-enterprise (SMME) vendors had taken advantage of filing VAT returns on a more frequent basis to access VAT refunds more timeously.
“A large portion of the tax relief is yet to be recorded as estimates for the employment tax incentive are not yet available and since the majority of the provisional tax relief will only take place with filing at the end of June,” the presentation noted.
Tax-relief measures for business announced by the government include a three-month deferral for filing and first payment of carbon-tax liabilities. The filing requirement and the first carbon-tax payment were due by July 31. This was delayed to October 31.
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