Small business owners ‘need support with handling tax affairs’
13 November 2014
Posted by: Author: Amanda Visser (BDlive)
Author: Amanda Visser (BDlive)
The cost of regulatory compliance for small businesses and entrepreneurs in SA is "prohibitively expensive" with current research showing that this could run close to R60,000 a year for a typical business.
The South African Institute of Tax Professionals is calling on the South African Revenue Service (SARS) to establish a small business centre to support and guide small business owners in their tax affairs.
"SARS enjoys success with their large business centre, which is a world-class facility that helps large businesses fulfil their tax obligations. Now is the time to focus on small businesses and to provide them with the tools and support services so that they can develop, create jobs and contribute to the economic wellbeing of the country, " said the institute’s CEO Stiaan Klue.
He referred to last week’s release of the 2014 Tax Statistics bulletin, compiled by SARS and the Treasury, which pointed to an increase in the tax burden.
All indications are that the burden would rise even further next year. The figures showed that individuals contributed 34.5% of the total tax revenue in 2013-14 compared with the declining 19.9% from companies.
Mr Klue said the general belief was that there is little room left to increase tax rates in SA, and that the only sustainable solution to the impending financial woes — resulting from weak economic growth and hence a higher tax burden — was to work towards growing the economy.
Recent figures from Statistics SA showed that the number of people running informal businesses declined from 2.3-million in 2001 to 1.1-million in 2009. It increased marginally to 1.5-million last year.
At the launch of the survey in August, statistician-general Pali Lehohla said many people had started their own businesses because of unemployment. The survey shows that the informal sector accounts for 5%-6% of SA’s gross domestic product, but contributes 15.8% of total employment. Most of those who started generating their own income had to borrow from friends or family to do so. However, loans obtained from commercial banks for this purposes have risen from 4% in 2001 to 16.6% last year.
Mr Klue said support for small and medium-sized entities was vital if the country was to extract itself from a "precarious financial position" and achieve the economic growth rates required.
In a recent survey by the tax professionals body, 65.5% of participating tax professionals said they considered compliance with tax laws as "the most daunting challenge" for small businesses.
More than 46% of respondents said in their experience the SARS service was not helping to support small businesses.
This article first appeared on bdlive.co.za.