In the 2006 Budget Speech Minister Trevor Manuel announced that the South African Revenue Service would offer a tax amnesty to small businesses with a turnover not exceeding R5 million, who had not been compliant with the tax system. One to the aims of the amnesty is to afford those who have been historically marginalised an opportunity to regularise their tax status. Taxes and penalties were to be waived for years of assessment ending on or before 31 March 2004, subject to a non-disclosure penalty of 10 per cent based on taxable income for 2005. The first phase of the amnesty was to take effect between August 2006 and May 2007, with a focus on the taxi industry. A second phase would extend the amnesty to other small businesses later in the year.
On this basis we drafted a set of proposals which we took through an intensive process including meetings with the Portfolio Committee on Finance (PCOF) and a series of Izimbizo in East London, Durban, Cape Town and Polokwane.
In East London
Approximately 700 small business operators drawn from the manufacturing sector, traders and more significantly from the taxi and construction industries participated.
Running parallel to the Imbizo was a tax clinic in which approximately 50 SARS consultants were on hand to provide personal and individualised attention to queries.
In KwaZulu Natal
In Durban, SARS hosted a dinner meeting with local stakeholders. Invited guests included representatives of the small business associations, organisations that represent the interests of small business and professional bodies and government structures directly involved with small businesses in the province. More than 70 representatives of various local business associations attended the meeting.
In Cape Town
In Cape Town, the campaign had two legs: a dinner with 15 representatives, most prominently the taxi association.
About 220 people attended the Imbizo itself. Organised groups including the South African Institute of Chartered Accountants, BUSA, SACOB, NAFCOC, Khayelitsha Business Forum, Certified Institute for Secretaries and the Institute for Administration and Commerce were well represented.
In Limpopo (workshop)
212 people attended the stakeholder workshop including small shop owners and taxi owners.
We have taken note of the views expressed by the stakeholders. We remain intent on ensuring we can provide an amnesty and maintain the integrity of tax law.
In any amnesty process people will ask for the unachievable and while we have taken note of their concerns it remains our goal to:
Following broad consultations, several key amendments to the original proposals have been made. These include:
One of the issues that still presents us with a challenge is penalties and interest for businesses with a turnover of R10 million who have fallen in arrears. This is a matter we will give due consideration to.
We urge small businesses to come forward in the spirit of the amnesty on offer. We want to assure everyone that once the door closes there will be vigorous enforcement of the law for businesses who do not comply.