Tax measures to combat COVID-19 outlined

28 Apr 2020

National treasury has provided more detail on the second set of tax measures designed to combat the COVID-19 pandemic.

President Ramaphosa announced further tax measures earlier this week to assist individuals and businesses through the pandemic.

In a statement, treasury declared that there is a “critical need for government interventions to assist with job retention and support businesses that may be experiencing significant distress”.

The measures, expected to provide around R70 billion in support, aim to help businesses stay afloat and able to pay employees and suppliers.

“Assisting businesses now will ensure that our economy is in a better position to recover once the health crisis starts to subside.”

Interventions include, from 1 May 2020, a four-month holiday for skills development levy contributions (1 per cent of total salaries) to assist all businesses with cash flow; fast-tracking of value-added tax refunds; three-month deferral for filing and first payment of carbon tax liabilities to 31 October 2020, providing cash flow relief of close to R2 billion; deferral for the payment of excise taxes on alcoholic beverages and tobacco products; an increase in the expanded employment tax incentive amount to R750 per month; an increase in the proportion of tax to be deferred and in the gross income threshold for automatic tax deferrals and larger businesses earning more than R100 million incapable of paying tax due to COVID-19 can apply for deferment of tax payments without penalties.

As regards individual taxpayers, the tax-deductible limit for donations (currently 10 per cent of taxable income) will be increased by an additional 10 per cent for donations to the Solidarity Fund during the 2020/21 tax year.

Changes to pay-as-you-earn for donations made through the employer and expanding access to living annuity funds are also on the cards.

In a briefing to parliament on the Draft Disaster Management Tax Relief Bill and the Draft Disaster Management Tax Relief Administration Bill, published for comment at the beginning of April, treasury announced that, given the second round of tax measures, the draft bills will be revised to take into account the above-mentioned tax measures as well as comments received on the bills.

The plan is to publish the revised draft bills on 30 April 2020 for comment.

In the briefing, treasury outlined the COVID-19 tax measures not yet included in the draft bills.

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(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)
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