The Minister of Finance announces relief for small businesses in Budget 2006 and a tax amnesty to help small business owners come clean. With South African Revenue Service (Sars) Commissioner Pravin Gordhan

LINDSAY WILLIAMS: Pravin, the relief for small businesses in the Budget was welcomed - of all the subjects covered on the Budget today this has been lauded the most - did you also welcome it?

PRAVIN GORDHAN: Absolutely. I think there’s a general commitment from government to support in whatever way we can - both from the point of view of the tax burden, and from the point of view of relieving the compliance requirements - on our small business community. Of course the additional benefit the small business has is the small business tax amnesty as well.

LINDSAY WILLIAMS: Can you tell us about the amnesty?

PRAVIN GORDHAN: Over the last few years we’ve had two phenomena - one is the wealthy saying they’ve got illegal assets overseas they haven’t declared. The foreign exchange tax amnesty gave them an opportunity to regularise their affairs and not lie awake at night worrying that Sars would come knocking at their doors. Now it’s the turn of small businesses - in particular in the first instance the taxi industry. Our aim here is to respond to what we’ve found, which is that there is a growing intent to be tax compliant but the worry was that any effort to be forthcoming would result in penalties, and an investigation that could go back ten years. This amnesty is designed to relieve that fear factor, to invite people into the system, and broaden the tax base by giving small businesses the opportunity to regularise their affairs.

LINDSAY WILLIAMS: Who’s going to be eligible to qualify for this amnesty?

PRAVIN GORDHAN: Any business that has a turnover of about R5-million, and anybody that’s currently not under investigation by Sars can qualify. Those who will be notified shortly in formal terms that they are under investigation don’t qualify for amnesty. Those who are in engaging in businesses that have not been registered for tax - or in some instances are registered, but are not compliant with their tax requirements, or if you run several businesses - then we’re interested, if the total is R5-million. The rules will be expanded as we formulate legislation - that will go to parliament before June 2006.

LINDSAY WILLIAMS: This whole initiative is going to mean more work for you - you’re setting up a separate unit I understand?

PRAVIN GORDHAN: We’ve okayed a unit - we’ve learned a lot from the amnesty unit that existed for the foreign exchange tax amnesty. Of course in this case we need to have a presence in many parts of the country - which we will do as well. It does involve more work, but we hope that we can build on a partnership that we have with organised taxi associations, and small business organisations to work out some of the protocols with them so their membership will be working with us rather than at cross purposes.

LINDSAY WILLIAMS: A different type of person I think is going to be involved in this amnesty from the previous one - do you think there will be suspicion, or do you think you will have tens of thousands of business owners coming forward?

PRAVIN GORDHAN: In these instances there is always hesitancy - we’ve got to provide the assurance that our approach is not a recriminatory one, or a vindictive one. This is a genuine effort of the part of government to opens its doors to enable people to become tax compliant at a relatively low cost - the alternative of not participating in the amnesty would be payment of full taxes, full penalties and interest, and where there is distinct tax evasion prosecution as well - so I think every individual will have to weigh up those possibilities, and determine what their options are.

LINDSAY WILLIAMS: One time capital gains tax relief for small businesses will be lifted from R500,000 to R750,000 - that’s a big percentage move…

PRAVIN GORDHAN: Yes, it is. Once again it’s about relieving the pressure on small businesses - giving them more opportunities to keep money in their pockets to use for investment and growth...

LINDSAY WILLIAMS: Another initiative - the Budget increased the qualifying annual turnover level to R14-million from R6-million, also the taxable income threshold for the reduced corporate tax rate of 10% will be raised to R300,000 from R250,000. These are all great initiatives - I’m sure they’re all going to make small business owners sleep better at night, make more money and create more employment - are you going to make it easier from a bureaucratic point of view as well for small businesses to conduct their day-to-day activities?

PRAVIN GORDHAN: Our aim is to make sure we keep an ear on the ground listening to our “customersâ€