While many small businesses find it difficult and costly to comply with certain regulations and laws, a Wits University lecturer says that not paying tax is a bad idea. Senior lecturer Asheer Ram, who specialises in accounting, cryptocurrency and taxes, told Vutivi News that there were various consequences for SMMEs which decided to avoid the taxman.
“Nobody enjoys paying tax, but it is necessary for the function of the government and the country. If you do not comply, there are a few sanctions which include penalties and interests, and the South African Revenue Services (Sars) can pursue criminal charges because non-compliance is criminal,” he said.
Ram said that Sars had introduced a system to make it easier for small businesses and their staff to be compliant.
“Unfortunately, the reality is that these are specialised skills and the requirements for complying with various taxes are significant. This is the reason why Sars introduced micro-business tax and turnover tax,” he explained. “Turnover tax is a system where the aim is to make it easier for SMMEs with a qualifying annual turnover (less than R1-million). It exists to replace the income tax, VAT and provisional tax and creates one type of tax. It’s a much simpler system.”
Sars also had support systems for SMME owners who were struggling with tax compliance. “I would encourage small businesses to look into the turnover tax regime, which makes things simpler,” Ram said.
“Sars does have teams that can assist with tax compliance and related queries. They have online channels and can be used, but unfortunately, there is no quick fix.” Ram also explained the various measures the revenue service had in place to help SMMEs during the pandemic, which were aimed at providing cash flow relief.
“Last and this year they were allowing deferments for certain payments. SMME owners can look at the Employment Tax Incentive, where you will withhold the full amount and you don’t pay the full amount to Sars but keep a portion of money for running the business,” he said. “Even though there is the relief you do have to pay the money back. The burden still rests on the taxpayer, and I don’t foresee any change from Sars’ perspective.
“If you meet requirements, it simplifies compliance, making sure that the taxpayers look at employees’ tax incentives and making use of these deferments,” he said.