Port closures will not affect trade, but strong communication is vital

Despite the closure of various ports of entry, the cabinet has yet to announce the comprehensive package of interventions to mitigate the expected impact of Covid-19, a highly infectious disease caused by the coronavirus.

Two seaports and 35 land ports have already been closed, mainly to limit the movement of people. The only commercial port of entry that has been closed is Nerston, on the border with Eswatini.

The SA Revenue Service (Sars) issued a statement on the closure of ports of entry, saying it will have limited effect on trade as it will continue as usual at all the other ports of entry.

It is vital that business is kept well informed and up to date on the situation, says Duane Newman, director at Cova Advisory and board member of the SA Institute of Tax Professionals (SAIT). “While there might be disruption to some supply chains due to closures in manufacturing plants in China, I would expect this to start unblocking as Chinese manufacturers start to get back online.”

It is of utmost importance for SA companies to keep strong communication with their suppliers in overseas countries and also review their own sourcing strategies for alternative sourcing, says Newman.

President Cyril Ramaphosa on Sunday announced several drastic measures to mitigate the impact of the spread of the virus on the economy and society.

This included the closure of schools on Wednesday, the prohibition of public gatherings with more than 100 people and a travel ban on high-risk countries. Visas have been cancelled and existing visas will be revoked.

Many countries that are battling with the spread of the virus have taken even more drastic measures — where there has been a total lockdown and the free movement of people has been severely restricted.

In the US the deadline for the submission of tax returns and certain payments has been postponed by several states and municipalities.

In SA taxpayers are also facing deadlines, including VAT submissions and payments, excise duty payments, and corporate income tax provisional tax payments.

However, in SA there has been no indication that any deadline will be extended. At the same time Sars has requested recognised controlling bodies, such as SAIT, the SA Institute of Chartered Accountants and the SA Institute of Professional Accountants to help limit access to Sars branches by themselves and their clients.

The office of the tax ombud has also suspended any further “walk-ins” at the office.

Jean du Toit, expert in commercial and tax law at Tax Consulting, hopes that Sars will consider extensions as a short-term relief measure. If there is late filing or payments, Sars could at least grant some latitude by not imposing penalties and interest, he says.

Aneria Bouwer, tax partner at Bowmans, says many businesses are experiencing delays with their filing and submissions, because of people being absent from work.

“It is extremely important for taxpayers, and especially employers and VAT vendors that they still need to comply with the timelines. The late payment of employees’ tax (PAYE) automatically triggers a 10% penalty.”

This can be a substantial knock for any business, especially if the business is already struggling as a result of the slow economic growth and the additional impact of the coronavirus, she says. Even if companies do apply for extensions, they should not bank on it.

Keith Engel, CEO of SAIT, says Sars has traditionally required taxpayers to physically visit a branch in certain cases. For instance, the donations tax return must be delivered physically.

At a more general level, client and taxpayer meetings will be delayed and people who are needed to assemble documents may be absent. This is why a growing number of countries are considering adjusted deadlines.

“If Sars’s deadlines are not to be adjusted out of fear of bad precedent, leniency of penalties should at least be the norm during this period of ‘extraordinary’ circumstances,” says Engel.

Du Toit expresses concern about how Sars will be dealing with the filing of returns and payment deadlines at branch level, especially as there has been open dissatisfaction with the assistance from the Sars call centre.

“Maybe this is the catalyst needed to improve service at the call centre, or to get a mechanism that can assist taxpayers and their practitioners more effectively remotely,” he says.

TAXPAYERS, AND ESPECIALLY EMPLOYERS AND VAT VENDORS, STILL NEED TO COMPLY WITH THE TIMELINES

35 the number of land points that have been closed in SA

10% the Sars penalty for the late payment of employees’ tax

MANY COUNTRIES THAT ARE BATTLING WITH THE SPREAD OF THE VIRUS HAVE TAKEN EVEN MORE DRASTIC MEASURES