SME & Other Relief Measures
Information regarding the COVID19 SME & other relief measures.
President Ramaphosa announced escalation measures to combat the COVID-19 epidemic on Monday to contain the spread of the disease (attached). In a decisive action, the National Coronavirus Command Council decided to enforce a nation-wide lockdown for 21 days with effect from midnight on Thursday 26 March 2020.
Certain categories of people who are involved in the critical business continuity services will however be exempted from this lockdown. Please find attached a list of such.
To cushion the effect of the consequent economic impact on society, a set of interventions were announced. Whilst I am sure you have familiarised yourself with all the proposed interventions, I will only be addressing specific interventions that may be applicable or available to your business, which are:
DIRECT FINANCIAL AID
A Solidarity Fund has been set up to assist individuals, small business and their employees affected by the coronavirus pandemic.
The Department of Small Business Development has made over R 500 million available to immediately assist small and medium enterprises that are in distress through a simplified application process.
The Industrial Development Corporation has put a package together with the Department of Trade, Industry and - Competition of more than R 3 billion for industrial funding to address the situation of vulnerable firms and to fast-track financing for companies that are critical to efforts to fight the virus and its economic impact.
It is not conceivable that these funds will assist all and everyone who applies, and the specific requirements for application are not yet made available. So far all we could obtain was the following website address which may contain an online application form: http://www.smmesa.gov.za/. At the time of this writing it was unavailable.
Serious concerns regarding a ‘51% Black Owned’ requirement have surfaced in the media with strong criticism coming from various support groups. Only when application forms in respect of these funds are made available will the validity of this requirement be apparent.
The government is currently in consultation on a proposal for a special dispensation for companies that are in distress because of COVID-19. Through this proposal employees will receive wage payment through the Temporary Employee Relief Scheme, which will enable companies to pay employees directly during this period and avoid retrenchment.
Any employee who falls ill through exposure at their workplace will be paid through the Compensation Fund. Reserves within the UIF system will be utilised to support workers in SME’s and other vulnerable firms who are faced with loss of income and whose companies are unable to provide support. Details of these will be made available within the next few days.
Comment: Once details of the application process relevant to wage relief is made available, we will update you.
Tax compliant businesses with a turnover of less than R 50 million will be allowed to delay 20% of their PAYE liabilities over the next four months and a portion of their provisional corporate income tax payments without penalties or interest over the next six months.
Temporary reduction of employer and employee UIF contributions and SDL contributions are currently being explored.
A Tax subsidy of up to R 500 per month for the next four months for those private sector employees earning below R 6,500 under the Employment Tax Incentive (ETI).
SARS will accelerate payment of ETI incentives reimbursements from twice a year to monthly in due time.
Comments: It is our contention that only tax compliant businesses will qualify for any of the relief measures mentioned above and that the PAYE and provisional corporate income tax payment deferral will only apply to the 2020 tax year. Businesses which are currently servicing arrear payment arrangements with SARS in respect of these tax types will not be able to obtain a tax compliance certificate and will be disqualified from application. Businesses that do not qualify for ETI incentives will also not be able to utilise the additional measures set out above (point 8 & 9).
From our conversations with SARS, none of the officials could advise on how these measures would be implemented in practice. We presume that details of such will be made available in due course.
As a matter of prudency, please ensure your business is fully tax compliant if you intend to apply for relief under any of the relief measures listed above.
The summary above is based on information that we could obtain to date. We will keep you posted on any new relevant information received.
Be assured of our support and assistance during this challenging period. Please contact us for assistance.