SARS TAKES A RELOOK AT LOW-HANGING FRUIT FOR TAX COLLECTIONS
Finweek English|4 February 2021
The voluntary disclosure programme (VDP) has led to much frustration in the past. Combined with a lack of efficient incentives for small businesses, Sars should reconsider how it’s dealing with this sector.
Amanda Visser
SARS TAKES A RELOOK AT LOW-HANGING FRUIT FOR TAX COLLECTIONS

Two important revenue collection opportunities for the South African Revenue Service (Sars) lie with its voluntary disclosure programme (VDP) and an enabling environment for critical small businesses. However, in both cases prohibitive legislation, the subjective interpretation of provisions and a lack of proper skills and resources are jeopardising collections.

In a welcome move Sars last year embarked on an extensive overhaul of the VDP. This year it will be conducting a study to determine the effectiveness of the current tax legislations, policies and incentives affecting small, micro and medium enterprises (SMMEs).

Sars has established a new SMME unit for taxpayers, traders and travellers that aims to make it easier for them to comply with their tax obligations.

Many will argue that the Covid-19 pandemic has highlighted the completely inadequate and inept support for and understanding of small businesses and their needs by government departments.

Duane Newman, director of Cova Advisory and head of the South African Institute of Tax Professionals’ (SAIT’s) business incentive and grants work group, says the biggest problem small businesses experienced during lockdown was a lack of cash flow as their operations were stopped by government regulations.

Little relief

“The government-backed loan guarantee was ineffective as banks still applied their own credit criteria to requests for loan extensions or relaxation of loan obligations,” Newman says.

He adds that it was concerning that nonCovid-19-related incentive- and grant-based schemes slowed down during the peak Covid-19 lockdown months.

“Most of these grants are offered by the department of trade, industry and competition. Our view is that government should have focused on ensuring existing programmes disbursed their funds much quicker,” says Newman.

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