A webinar hosted by the Small Enterprise Development Agency (SEDA) in partnership with the South African Revenue Services (SARS) has shed light on some of the tax incentives that are available for SMMEs. The webinar, which covered small business tax obligations and compliance, heard that turnover tax was a simplified form of tax and an alternative to income tax. It was available for SMMEs with a turnover of less than R1-million
Itumeleng Molefe from SARS’ taxpayer education division said there was also a small business corporate tax incentive that was available for micro-businesses to ease the burden of compliance. She said the aim was to streamline tax compliance requirements for micro-businesses and to ease the burden of administration, thus reducing the total cost of complying with tax obligations. “These incentives afford traders far lesser rates compared to the standard tax rates for larger businesses,” she said.
If an entity is made between R87,301 and R350,000 it is taxed 7% of its gross income. While businesses that have an annual turnover of between R350,001 and R500,000 pay 1%, and those that have a turnover of between R500,00 and R750,000.00 pay 2%. Molefe said enterprises that made up to R335,000 did not have to pay tax but still needed to declare their turnovers on the necessary documents. Molefe noted that those who qualified for this tax incentive included individuals, partnerships, close corporations, companies and cooperatives.
However, there are limitations to this sort of tax incentive. She said that not more than 20% of the revenue may consist of passive income or investment income, and not more than 20% of income should be from rendering personal service. “The investment income includes dividends, rentals from immovable property, interest income and royalties,” Molefe said.
“Anyone who can see that they qualify for this type of tax incentive is encouraged to use the SARS online booking system to make an appointment at their nearest SARS branch, as the service is not yet available on the SARS e-filing platform.”