Tax relief for SMMEs under way

Small medium and micro enterprises (SMMEs) are set to receive tax relief from Finance Minister Trevor Manuel this year. Announcing several tax proposals in this year's Budget Speech, Manuel said that the government would take further steps to reduce the tax compliance burden on small businesses.

Small medium and micro enterprises (SMMEs) are set to receive tax relief from Finance Minister Trevor Manuel this year. Announcing several tax proposals in this year's Budget Speech, Manuel said that the government would take further steps to reduce the tax compliance burden on small businesses.

The budget review explains that these measures are aimed at supporting small businesses, to increase entrepreneurship by reducing compliance costs, and encouraging the formalisation of informal businesses.

These initiatives will see SMMEs within the revenue threshold accessing presumptive tax systems, as well as tax incentives for venture capital investors looking at qualifying for small enterprises and start-ups.

But the national treasury warned that this system was aimed at reducing tax compliance costs and not necessarily tax liability.

This presumptive tax system will be elective. Those who join the system will be required to remain for a minimum of three years - unless they exceed the revenue threshold - and will not be able to rejoin for five years after choosing to exit.

Personal services "rendered under employment-like conditions" and professional services are excluded from this tax system.

The minister raised the threshold for businesses that submit VAT returns on a six or four monthly basis to R1,5million, from R1,2million.

The VAT registration threshold will be raised from an annual turnover of R300000 to R1million.

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