The Commissioner of the South African Revenue Services (Sars), Mr Edward Kieswatter, on Tuesday told members of the Standing Committee on Finance and of the Select Committee on Finance that tax relief measures announced by President Cyril Ramaphosa aimed at mitigating the impact of Covid-19 on small and medium-sized businesses, will have direct revenue reduction and cash-flow implications.

Mr Kieswatter told the two committees that Sars has projected the actual impact over a maximum period of six months, starting from 1 April 2020, to be in excess of R70 billion. His presentation stated that the biggest impact is expected to come from the deferral of 35% of pay-as-you-earn liability for four months for businesses with expected gross turnover of less than R100m per annum. It further indicated that this is expected to have an impact of R21 billion.

The Sars Commissioner also stated that the deferral of 35% of provisional tax payments for the next six months for businesses and the self-employed with expected gross turnover of less than R100 million is expected to have revenue impacts of R15 billion over the same period.

However, Sars is projecting a fall in compliance during the national lockdown and has undertaken to fully implement its third strategic objective, thereby seeking to detect all non-compliance and take corrective measures to counter the impact on revenue. The revue services identified nine strategic objectives in its annual performance plan for the 2020/21 financial year, as well as the medium term expenditure framework.

According to the strategic goal 3, Sars aims to detect taxpayers and traders who do not comply, and make non-compliance hard and costly. This, according to Mr Kieswatter’s presentation, will be achieved by ensuring, among other things, concerted effort to combat syndicated fraud, including value-added tax and undervaluation of imports.

The Standing Committee on Finance, together with the Select Committees on Finance were briefed on the National Treasury and Sars’ strategic and annual performance plans, and budget for the 2020/21 financial year by Minister Tito Mboweni and Deputy Minister David Masondo, together with the National Treasury Director-General and the Sars Commissioner.

The National Treasury presented an annual budget of R33.1 billion, which will be spent under the seven departmental programmes.

Co-Chairperson Mr Joe Maswanganyi advised the National Treasury to consider revising its annual plan to deal with the economic structural reform measures, in order to address the challenges of poverty and joblessness.

However, the two committees welcomed the statement from Minister Mboweni that small, medium and micro-enterprises and cooperatives should be given equal opportunity in the procurement of personal protective equipment for Covid-19, as long as they meet prescribed minimum standards.

The committees held the firm view that the national disaster arising from the Covid-19 pandemic is not a license to suspend application of the Constitution and other legislation concerning procurement.

Lastly, Mr Joe Maswanganyi emphasised that procurement processes during the state of national disaster must be conducted within the framework of existing statutes, including Section 217 of the Constitution, the Preferential Procurement Policy Framework Act and the Broad-Based Black Economic Empowerment Act.

Justice Molafo
6 May 2020