A heavy tax burden weighs down SA’s growth engine
07 September 2016
Posted by: Author: Amanda Visser
Author: Amanda Visser (BDlive)
The government considers small and medium enterprises as the future drivers of economic growth and employment, yet a heavy compliance burden and increased enforcement by the South African Revenue Service (SARS) remain stumbling blocks.
During a discussion by experts on the plight of small business at the annual Tax Indaba in Midrand, concerns that were the lack of proper documentation for refunds, the lack of sector specific tax assistance, and an increased "perceived" aggressiveness were highlighted as areas of concern.
Marc Sevitz, founder of TaxTim (an online tool to assist with filing tax returns), said countries like Singapore, Malaysia and the UK had created special regimes for specific industries in the SME sphere.
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Sevitz said these regimes did not have to offer more tax incentives or tax breaks, but should create a way to "hold the hand" of a small business until it was ready to enter into the more formal tax regime.
SARS had shown in the past that it was capable of designing targeted programmes, he said, and it would be possible to create some benchmarking for the larger and more important sectors (such as the taxi industry) in South Africa to assist with compliance.
"Perhaps that is something that South Africa should consider since one-size-fits-all does not seem to be working."
Veli Ntombela, tax director at Sizwe Ntsaluba Gobodo, referred to a taxi driver whose only form of documentation was the traffic tickets he has received.
He suggested there must be a way to assist small-business owners in this industry by allowing some basic expenses such as fuel, tyres and services.
Many of these businesses did not have the cash flow to service their taxis at dealerships, and the small businesses performing the service were not in the habit of issuing receipts, he said.
It might be too late to help some of these businesses with their compliance issues, but once they registered for tax, whether for Value Added Tax or turnover tax, there had to be a support system to help them to become and remain compliant, he said.
SARS representative Narcizio Makwakwa said that from SARS’s perspective, "aggressive" was sometimes a different word for "efficient". When there was procedural unfairness, small businesses could approach the Office of the Tax Ombud.
However, there seemed to be double standards: documentation that was available to claim refunds is nowhere to be found when there was a query, Makwakwa said.
Deon van Zyl, partner at PKF chartered accountants, said that even in instances where supporting documentation was submitted, VAT refunds were not paid out.
There was a cost involved for taxpayers as most did their own VAT returns and were eventually forced to employ the services of a tax professional to assist them to get their refunds.
"We have seen that refunds are not being paid as they used to be. It might be because of the slowdown in the economy. I do not know what there reasons are, but it is frustrating and it has a cost associated to it for small business," Van Zyl said,
Makwakwa said there was no instruction from SARS to its officials to withhold refunds, reiterating that in instances of procedural unfairness, taxpayers could complain to the ombud or the complaints management office.
But the complaints office has been criticised for its inefficiency and inability to resolve taxpayer issues.
SARS has acknowledged that there is work to be done.
This article first appeared on businesslive.co.za.