SOUTH AFRICAN REVENUE SERVICE
PRESS STATEMENT

31 JULY 2006

INTRODUCTION OF THE SMALL BUSINESS TAX AMNESTY

The tax amnesty for small business - as promulgated by the President on 25 July this year and contained in the Small Business Tax Amnesty and Amendment of Taxation Laws Act (Act 9 of 2006) takes effect tomorrow 1 August 2006.

The amnesty will introduce a window of opportunity to a wide spectrum of small businesses in South Africa to regularize their tax affairs.

The South African Revenue Service (SARS) will administer the amnesty which will run until 31 May 2007. SARS will have a dedicated Small Business Amnesty Call Centre in operation to assist taxpayers.

All information on the Small Business Amnesty is available now on the SARS website.

The Act provides for a small business tax amnesty in respect of the voluntary disclosure by an applicant of any failure to comply with revenue laws administered by the Commissioner of SARS.

The purpose and objective of the tax amnesty is to -

• broaden the tax base;
• facilitate the normalisation of the tax affairs of small businesses;
• increase and improve the tax compliance culture; and
• facilitate participation in the taxi recapitalisation programme.

Taxpayers who qualify for amnesty

Any individual, unlisted company, close corporation, trust, co-operative or insolvent or deceased estate, of an individual which meets certain requirements may apply for tax amnesty. The requirements are that-

• the individual or entity must have carried on a business;
• the turnover (gross income) of the business (or businesses if the individual or entity carried on more than one business) during the 2006 year of assessment was not more than R10 million;
• in the case of a company or close corporation all the shares or members' interests were held directly by individuals throughout the 2006 year of assessment;
• in the case of a trust all the beneficiaries of that trust throughout the 2006 year of assessment must have been natural persons.

For purposes of the amnesty, the "2006 year of assessment" is defined as the year of assessment which ended during the period of 12 months from 1 April 2005 to 31 March 2006. Small businesses which are unregistered for tax purposes at the end of the 2006 year of assessment or which are registered taxpayers but whose income from, supplies made or employment taxes due in respect of small business activities have not been declared or have been understated during any year of assessment preceding the 2006 year of assessment will benefit from the amnesty.

Method of application

An applicant must apply for amnesty to SARS on a form which can be obtained at any SARS branch office in any of the 11 official languages in South Africa. Application forms must be submitted at any time during the period 1 August 2006 to 31 May 2007.

The applicant must, together with the application for tax amnesty furnish -

• an income tax return for the 2006 year of assessment; and
• a statement of all assets (at cost) and liabilities of that applicant as at the end of the 2006 year of assessment.

If it is not possible for the applicant to provide full particulars of any actual amounts in the application or in any return or statement relating to the application, the applicant may provide a reasonable estimate of those amounts. If an estimate is used this must be clearly indicated.

Amnesty Levy

An amnesty levy is payable for amnesty. The amnesty levy is based on a sliding scale rate and is applied to the taxable income of the applicant for the 2006 year of assessment to the extent that the taxable income is attributable to any amount derived by the applicant from the carrying on of business.

All public enquiries about the amnesty can be referred to:

The SARS Small Business Amnesty Unit:
Call Centre number: 0860 12 12 20
Fax: 011 602 5502
e-mail: sbau@sars.gov.za
Postal address: P O Box 292
Groenkloof
0027

ENDS

ISSUED BY THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE
PRETORIA