More Tax Help Needed to Encourage Small Business
23 September 2013
Posted by: Author: Evan Pickworth
Author: Evan Pickworth (BusinessDay)
The high-profile tax review committee set up by Finance Minister Pravin Gordhan and President Jacob Zuma in February is investigating the taxation of small businesses and their tax compliance costs, and industry experts on Friday submitted a raft of concerns and proposals to the committee to improve the system.
In a letter to committee chairman Judge Dennis Davis and committee member Prof Matthew Lester, tax technical policy and research head at the South African Institute of Tax Practitioners (Sait), Prof Sharon Smulders, said all initiatives for small business needed to be centralised so businesses knew "where to go as a starting point for assistance".
Red tape and a lack of incentives have been plaguing growth in a crucial sector for jobs growth, and, according to the Global Entrepreneurship Monitor, entrepreneurship has fallen to a new low in South Africa. "Having a myriad different institutions offering assistance and training just complicates matters even further," said Prof Smulders.
The Cabinet last week approved the publication for public comment of the Draft Employment Tax Incentive Bill, which is aimed at encouraging employers to give young people their first job experience. "To further encourage employment, a company tax rebate could be considered," in getting a tax rebate based on the number of staff it employs.
Judge Davis told Business Day in May that when it came to small business "we have to think very carefully if this act (the new Tax Administration Act) has struck the balance properly between rights of the taxpayer and SARS (South African Revenue Service ) powers.
"What I mean is, in terms of transactional costs and levels of complexity," Judge Davis said yesterday.
The balance was being properly struck for bigger businesses, in his view.
"Small business is high on the agenda of (the) Davis commission," said Sait CEO Stiaan Klue yesterday.
He also reiterated calls for a dedicated ministry for small business to promote the job-creating potential of this sector.
Three ministers — finance, economic development, and trade and industry — share the responsibility for small business support.
The corporate tax turnover threshold was raised from R14m to R20m in the sector, but incentives are seen as not strong enough.
The letter calls for the limit to be raised to R50m, while the value-added tax threshold should also be increased.
This article first appeared on businessdaylive.co.za on 23 September 2013