I'm wondering if all the recent tax breaks, amnesty, extensions etc etc is really helping small business or is really just helping SARS?

CAPE TOWN (Reuters) - South Africa has offered an amnesty to small companies that have avoided paying tax for years if they come forward and regularise their tax affairs, the National Treasury said on Wednesday.

The government is eager to bring a massive unregulated informal sector into the mainstream economy to help stimulate small business and cut widespread poverty and unemployment.

"Although small businesses play a valuable economic and developmental role, many were historically marginalised," the Treasury said in the 2006 budget, unveiled by Finance Minister Trevor Manuel in parliament.

"They were excluded for the economic mainstream, operated informally and remained outside the tax system."

The Treasury hopes to entice hundreds of thousands of small firms, including about 100,000 minibus taxi operators, into the formal economy, giving them the chance to operate freely and grow without fear of attracting penalties for unpaid taxes.

The amnesty will allow the South African Revenue Service to waive taxes due from small businesses with annual turnover of less than five million rand for the years of assessment to March 2004.

"This waiver will require submission of an income tax return for 2005 as well as a non-disclosure penalty of 10 percent on taxable income for 2005," the Treasury said.

The first phase of the amnesty would be targeted at the taxi industry and would run from August 1 this year to May 2007. A second phase for other small companies would run later in 2007.

The Treasury warned that all companies that did not freely enter the tax system would face additional tax, interest and prosecutions.



© Reuters 2006.