Call to relax tax laws for entrepreneurs
26 February 2013
Posted by: SAIT Technical
to SAIT, the red tape and costs involved for small to medium businesses
is stifling entrepreneurship and as a result, crippling job creation.
The institute made several calls including tax policy reforms, a
revision of the turnover tax regime and establishing a commission of enquiry into tax policy.
Cape Town - The red tape and costs
involved for small to medium businesses is stunting entrepreneurship, according
to the South African Institute of Tax Practitioners (Sait).
The high costs involved to
legitimise many small to medium businesses hampers entrepreneurship and this
contributes negatively to the economy because it cripples job creation
The institute is calling on Finance
Minister Pravin Gordhan to make tax policy reforms that is in line with the
ever changing business landscape.
Gordhan will deliver the National
Budget speech on February 27 and is widely expected to touch on issues such as
mining taxes, the National Health Insurance system and the National Development
"The NDP identified small businesses
as the key driver to eradicate unemployment, but compliance with tax laws
remains a massive obstacle to many entrepreneurs,” said Sharon Smulders, head
of tax policy and research at Sait.
Smulders believes the current
turnover tax regime, introduced in 2009, should be revised in order to remain
relevant for the changing business environment.
"We commend the initiative of
President (Jacob) Zuma to follow in the footsteps of former President (Thabo)
Mbeki in establishing a commission of enquiry into tax policy,” said Sait’s
chief executive Stiaan Klue.
In 2010 Judge Dennis Davis, who was
the deputy chair of the 1996 Katz commission of enquiry into taxation, called
for the re-establishment of an enquiry into tax policy reform, pointing out
that the final report of the Katz Commission was never presented to parliament
or released to the public.
Klue said that the global financial
crisis and the growing budget deficit highlight the need for a critical
re-analysis of the sustainability of the South Africa’s tax policy.
"An analysis of the lessons learnt
over the past 18 years must be conducted, and should inform a new strategy
which can achieve a more balanced democracy in the NDP for 2030 and beyond,”
The institute also proposed a
relaxation in the current provision in the Income Tax Act for registered
internships. It said that this would address the youth wage subsidy and satisfy
employers, labour unions and unemployed graduates.
internships through tax incentives for business in a bid to educate the youth
and serve as a tool to transfer skills, will not only achieve the objectives of
government by introducing the youth wage subsidy, but it will also alleviate
unemployment and provide practical business tools to the unskilled to become
entrepreneurs,” said Ronel de Kock, head of the tax institute.