What South African tax relief measures are available amidst COVID-19 pandemic?

Exceptional tax measures have recently been announced as part of the fiscal package that was presented by the President in his recent speech on the Escalation of Measures to Combat COVID-19.

The tax measures result from the realisation that there is a critical need for Government interventions to assist with job retention and assist businesses experiencing significant distress.

Firstly, measures have been proposed to assist small- to medium-sized businesses (SMEs) with an annual turnover not exceeding R50 million provided that their tax returns have been submitted and that they have no outstanding tax debt. Government will permit compliant SMEs to defer payment of 20 per cent of their PAYE liability over the next four months to assist with cash flow. The deferred PAYE liability must then be paid to SARS in six equal instalments, with the first payment to be made on September 7, 2020.

Secondly, Government will also permit a deferral of a portion of provisional tax payments without penalties and interest over the next six months for compliant SMEs. The first provisional tax payment, due between April 1, 2020 and September 30, 2020, will be based on 15 per cent of the estimated total tax liability. The second provisional tax payment, due between April 1, 2020 to March 31, 2021, will be based on 65 per cent of the total estimated tax liability. Provisional taxpayers that have deferred payments will have to pay their liability in full when making their third provisional tax payment.

Thirdly, an expansion of the employment tax incentive (ETI) age eligibility criteria and the amount claimable for employers that were registered with SARS as at March 1, 2020 has been announced. A tax subsidy of R500 per month will be granted for the next four months for private sector employees earning below R6,500. Further, the tax incentive reimbursements will be accelerated from a twice yearly payment to a monthly payment to assist employers with cash flow.

It has also been announced that further tax relief measures will be considered with the aim of assisting taxpayers during the COVID-19 pandemic.