Tag Archive | tax incentives

Small business gets R1bn incentive scheme

Tax relief and business incentives

The new small business development department (SBDD) has transferred from the department of trade and industry (DTI) the R1bn fund which covers both corporate incentives to develop small business and the Small  Enterprise Finance Agency (SEFA).

However, it will leave with DTI all matters relating to B-BBEE insofar as regulations are concerned.  Both the new minister, Lindiwe Zulu, and deputy minister, Elizabeth Thabethe, were present for a short departmental briefing by SBDD given to the new small business portfolio committee chaired by Ruth Bengu, who in the last parliamentary period served as chair of the transport committee.

Revised thinking

In an earlier portfolio committee meeting of trade and industry, a few days before under their chair, experienced ANC member Joan Fubbs, DTI had called for a rethink on small business policy.

They said they wanted to see a clearer policy on the SMME support role by national government with provincial and local government and to establish a programme for rolling out more small business “incubators”- something that opposition parties had been calling for over a long period of time.

Also DTI supported the call to review the small claims court system so that access to affordable justice was more affordable. They wanted this to be a further target of the new department.

Such recommendations came amidst a foray of criticism by commentators that the new department could become a diversion for unsolvable small business issues or alternatively the new department could become merely a point for start-up small business without any real muscle.

Less red tape

The new department in addressing MPs confirmed to them that its mandate was to focus on “enhanced business support” and they emphasised their support for women, people with disabilities and to provide mechanisms to access finance, business skills development.  They also said they were there to ease regulatory conditions; to help regulate better the SMME environment and to give leverage on public procurement.

It was important to recognise, SBDD said, that it was also there to encourage the development of cooperative entities, in which instance shareholders themselves were the members and entrepreneurs. Finally, the process of creating market access was an important task, they added. Nothing was new here.

But opposition ears pricked up when they said tax relief grants to corporates that invested in small business development were to be considered and incubation programmes and technology upliftment were priorities.  The immediate future, however, was all about configuring the new department; the “migration” of responsibilities from DTI; and transferring allocations for the establishment of support institutions.

Chair of the committee, Ruth Bhengu – previously chair of the parliamentary transport committee – then called for response from opposition members which mainly came from Toby Chance of the DA, whose questions were answered by both by the new minister and deputy minister.

Jobs or not

Chance said that whilst applauding the formation of this department, he wanted to know whether or not any success was to be measured in terms of jobs created,  which to him was the bottom line, he said. Also he wanted a clearer definition of what government actually meant by the term “small business”.

He said there were plenty of “gleaming new supermarkets in our townships but very little industrial developments, in fact some industrial parks were in a state of decay.” Chance said the DA was also worried that the impact of new labour legislation and labour regulations was immobilising small business and the amount of red tape currently being experienced was becoming “out of hand”.

Chance said he hoped the new department recognised the fact that that corporates and industry should focus on the development of small businesses to create the job growth called for by the NDP.   Partnerships with small business were the best way of achieving this, he noted.  He concluded that all “tax incentives should be re-visited” and that more emphasis should be laid on small manufacturing businesses.

In reply, minister Lindiwe Zulu agreed on the issue of red tape as a hindrance to small business and said her objective was to become like Rwanda where direct contact with national bodies that supported initiatives was far easier.

Compliance for all

However, she said that business had to understand that it had a role to play and a “culture of compliance” had to be encouraged in both small and large business and manufacturers or there would be anarchy.   Also large businesses and the state will have pay small business invoices on thirty days or risk penalties.

The minister said on the subject of labour regulations, dept of labour had its own targets and own agenda on decent work conditions and that was a separate issue. “The job of small business development was to work inside current conditions and for business to respect that.”

Chance replied that the governing party seemed to have “developed a track record of “attacking business persons when they criticised ANC economic policies or asked tough questions”, which statement prompted vehement denials from the minister and deputy minister.

Other articles in this category or as background
http://parlyreportsa.co.za//trade-industry/licensing-of-businesses-bill-re-emerges/
http://parlyreportsa.co.za//bee/minister-davies-gets-cooperatives-bill-approved/
http://parlyreportsa.co.za//parlyreport-contacts/cabinet-ministers/ministry-small-business-development/

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Various tax regimes passed by Parliament

Tax changes for 2013 imminent…

Giving effect to most of the tax proposals announced in the 2013 budget review, the Taxation Laws Amendment Bill, with its tandem enabling Bill – the Taxation Administration Laws Amendment Bill – have both passed through the standing committee on finance as a money Bill.

Probably the most important for economic growth is the proposed beneficial tax regime for companies that decide to take advantage of the new Special Economic Zones Bill introduced by minister of trade and industry, Dr. Rob Davies, and now almost finalised by Parliament.

Other tax proposals are to back up the cabinet wish to revitalise South Africa’s maritime sector with an attractive tax regime to encourage exports, mainly using Africa coastal routes.

Catching up with profit deflection

Minister of finance Gordhan Pravin’s tax proposals also include moves to discourage profit-shifting through excessive interest deduction and the use of artificial debt and the payment of certain dividends which gain tax deductions.

Retirement fund deductions are affected as from next year, as will be certain matters regarding provident funds. Most important are the easing of conditions under which low-income employees are acquire houses at below market value without tax being payable under the current fringe benefit system.

Foreign e-commerce suppliers are to register for VAT.

Tax practitioner’s regs

There are a number of changes affecting the completion of tax forms  and there are new regulations for tax practitioners, mostly involving the principle of “accountability”.

Treasury has promised specific legislation on the employment tax incentive and waste discharge incentive charges later this year and comments on both Bills was closed early August in order for the money Bills in question to be processed during September.

Refer previous articles in this category
http://parlyreportsa.co.za//finance-economic/dividends-withholding-tax-arrives-on-time/
http://parlyreportsa.co.za//cabinetpresidential/pravin-gordhan-best-budget-vote-speech-of-the-year/

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