Taxation and SMMES

t takes unbelievable courage, sweat and tears to start and build a business in South Africa. Entrepreneurs sacrifice, emotionally and financially, often in punishing environments, where corruption, crime and lack of basic services are a daily experience. They don’t need more obstacles on their path.

𝐓𝐚𝐱 𝐜𝐨𝐦𝐩𝐥𝐢𝐚𝐧𝐜𝐞

Let’s make it easier for small businesses to focus on their business, without stressing about onerous tax compliance obligations. Entrepreneurs don’t have time or technical knowledge to run around the taxation minefield, where stiff penalties and interest is lurking in every corner. In the early years, they can’t afford the cost of using accountants timeously to comply with their tax obligations, for the business and themselves.

𝐓𝐚𝐱 𝐫𝐞𝐠𝐢𝐦𝐞 – 𝐁𝐮𝐬𝐢𝐧𝐞𝐬𝐬

* Normal company tax rate: 27%

* Small Business Corporations: 0% for taxable income up to R95,750, and goes up to 27% for income above R550,000

* Turnover tax for businesses with annual turnover of less than R1million, replaces Income Tax, Provisional Tax, Capital Gains Tax, Dividends Tax and/or VAT, 0% turnover tax up to R335000, and goes up to R 6650 + 3% for turnover over R 750 000

𝐓𝐚𝐱 𝐫𝐞𝐠𝐢𝐦𝐞 – 𝐈𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥

When the entrepreneur takes a salary from the business, it is taxed in accordance with personal income tax tables. For those under 65, after R 95 750 of taxable income, tax rates go from 18% to 45%.

𝐓𝐚𝐱 𝐅𝐫𝐞𝐞 𝐈𝐧𝐜𝐨𝐦𝐞 (Business & Individual)

What if anyone, could start and a build a business, knowing they enjoy for example, R 2 million in tax free income per tax year, for up to 5 years? The business generates up to R 2 million, with no income tax on the profit or the salary paid to the owner. Both come out smiling.

How many tax compliance hours will be saved each year by the entrepreneur (and SARS too)? How will it make entrepreneurs feel about the risks they take and the rewards they get from the business? How much more money will they have in their pocket to reinvest into the business or spend in their communities?

If this resonates with you, please share your thoughts and repost.