Companies receiving Covid-19 relief urged to pay taxes
Simnikiwe Hlatshaneni
Companies who benefit from more than half-a-trillion rand’s worth of Covid-19 relief packages should do the right thing next tax season, according to a tax expert.
This as government braces for a massive dent in revenue collection this year following the country embarking on a protracted lockdown period.
South African Revenue Service (Sars) commissoner Mark Kingon was today expected to update the nation on issues pertaining to revenue collection.
Chief executive of tax company BTMT Busisiwe Mdletshe said government’s relief efforts for businesses were expected to pay off when the economy bounced back.
Finance Minister Tito Mboweni last month announced relief for qualifying companies to defer 35% of their employees’ tax over four months. He also announced provisional corporate income tax relief without penalties or interest. The gross income threshold for both deferrals was increased from R50 million to R100 million, providing total cash flow relief of around R31 billion with an expected revenue loss of R5 billion.
“The R500 billion stimulus package came from taxpayers, but it would be shortsighted for them to give so much in relief and not expect it back later,” Mdletshe said, adding that compliance and cooperation by all companies who could afford to forego the relief and those who would be due to pay in the next collection season was important for government to begin to recover the expected losses in revenue this year.
According to the Centre for Development and Enterprise in a newly published report, South Africa could not simply recover by returning to its pre-Covid-19 growth trends – it needed to surpass them to fully recover.
Policymakers could not assume that the economy emerging after the lockdown would be capable of generating even the very low rate of growth that South Africa had over the past decade.
“The Covid-19 crisis means that we may permanently lose some of our industrial and commercial capabilities. It is vital that the recovery from the Covid-19 crisis not be a repeat of the global financial crisis,” the report said.