The Covid-19 pandemic heralded a wave of devastation to human lives, as well as the economy in South Africa, but the government is working vigorously to curb the spread of coronavirus. As part of the stringent measures, President Cyril Ramaphosa has declared the Covid-19 pandemic a national disaster and subsequently imposed a national lockdown.

The lockdown was aimed at flattening the curve with regard to new coronavirus infections, but it had devastating unintended consequences on the small or medium-sized businesses (SMEs). Their production activities were brought to a complete halt.

As part of government measures to mitigate the Covid-19 pandemic, the National Treasury has tabled in Parliament two draft Bills to assist those SMEs which are tax compliant to increase production levels and keep some liquidity. The draft Bills are the Disaster Management Tax Relief Bill and the Disaster Management Tax Administration Bill.

The National Treasury, together with the South African Revenue Service (Sars) jointly briefed members of the Standing and Select Committees on Finance on the draft Bills recently in a virtual meeting, which was also accessible to members of the public.

Having been apprised on the draft Bills, the two committees subsequently undertook to process the Bills diligently within the legal framework and the Rules of Parliament. This includes conducting public hearings, which is a legislative imperative in so far as the process of working on a Bill is concerned.

During the meeting, the Co-Chairperson of the joint committee, Mr Yunus Carrim, who is the Chairperson of the Select Committee on Finance, said the briefing was critical because members of the committees wanted to see a clear picture of what the government wanted to achieve. “We will do everything possible to diligently process the Bills within the legal framework and conduct public hearings, as required by law,” said Mr Carrim.

The other Co-Chairperson, Mr Joe Maswanganyi, who is the Chairperson of the Standing Committee on Finance, reiterated the importance of Parliament working in harmony with the other arms of the state, the executive and the judiciary, in line with the spirit of the doctrine of the separation of powers. “Considering where we are as a country, it is important to conduct oversight in order to ensure that procurement processes from the Disaster Management Fund do not suspend constitutional provisions,” said Mr Maswanganyi.

In his presentation, Mr Ismail Momoniat, who is the Head of Tax and Financial Sector Policy at the National Treasury, outlined the key components of the Draft Disaster Management Tax Relief Bill, and the Draft Disaster Management Tax Administration Bill.

Mr Momoniat said: “The key components of the Draft Disaster Management Tax Relief Bill are the expansion of the employment tax incentive age eligibility criteria and amounts claimable, as well as the deferral of the payment of employees’ tax liability and payment of provisional tax liability for tax compliant small or medium-sized businesses.”

The National Treasury defines small or medium-sized businesses as to mean any business with an annual turnover not exceeding R50 million.

Lastly, the key component of the Draft Disaster Management Tax Administration Bill is a streamlined special tax dispensation for funds established to assist in connection with the Covid-19 disaster relief efforts.

By Justice Molafo

27 April 2020