A system of taxation that could relieve small businesses may come into effect soon if the recommendations of an investigating committee are implemented, Business Day reports.
The Davis Tax Committee on Monday released an interim report that strives to improve tax benefits and incentives for small and medium-sized enterprises (SMEs).
The report aims to reduce the tax compliance burden on smaller businesses and attempts to incentivise the funding of startups via more favourable taxes.
At the moment, small businesses with no taxable income do not receive support, meaning the incentive is more beneficial to companies with high taxable incomes.
Comments on the changes need to be made by the end of August.
The committee calls for a more enabling environment for enterprises to grow and expand their operations and employ more people. Conditions must be created under which startups can flourish and more entrepreneurs are encouraged to enter the market.
Within this context, the specific question of excessive regulation and its attendant costs “becomes an important consideration for analysis”.
This is the first report the committee has delivered to the Minister of Finance in terms of its broad mandate to review and improve the entire tax system, and determine the extent to which taxes paid benefit society.
Research by the committee revealed that it took small businesses, on average, 255 hours a year to deal with all tax-compliance-related matters. It called for “comprehensive separate lines of communication and offices for the SME sector”.
It recommends rebates of R10,000 to R20,000, depending on the turnover of a business, as well as rebates for small businesses that do not have taxable income.