Various tax breaks will be implemented as part of the government's R500 billion stimulus package for businesses.
Finance Minister Tito Mboweni has announced tax breaks to help businesses focus on staying afloat and paying their employees and suppliers. The measures to be introduced are expected to provide around R70 billion in support, either through reductions in taxes otherwise payable or through deferrals of tax payments for tax compliant businesses.
The National Treasury released a statement on Thursday in which it stated that it had received a large number of requests for assistance, including requests from large businesses that are also experiencing substantial cash flow difficulty.
Among those that will be exempted are the country’s alcohol and cigarette producers who, due to the restrictions on the sale of alcoholic beverages and tobacco products, are set to get R6 billion in tax breaks.
Companies will also get a four-month holiday from paying skills development levy contributions (1 per cent of total salaries), which is also expected to provide relief of around R6 billion.
“Larger businesses (with a gross income of more than R100 million) that can show they are incapable of making payment due to the COVID-19 disaster, may apply directly to SARS to defer tax payments without incurring penalties. Similarly, businesses with a gross income of less than R100 million can apply for an additional deferral of payments without incurring penalties,” said the Treasury.
The tax breaks are a part of the R500 billion stimulus package for business that President Cyril Rampaphosa announced on Tuesday as part of government’s response to the Covid-19 pandemic.