A CRITICAL ANALYSIS OF THE BARRIERS TO ENTRY FOR SMALL BUSINESS OWNERS IMPOSED BY SECTIONS 12E(4)(A)(III) AND (D) AND PARAGRAPH 3(B) OF THE SIXTH SCHEDULE OF THE INCOME TAX ACT, NO. 58 OF 1962

Abstract
According to National Treasury’s Explanatory Memorandum on the Revenue Laws Amendment Bill,
2008, small businesses in South Africa are instrumental in the growth of the South African economy
as they are a source of job creation and a counter to poverty. Research, however, indicates that small
businesses face many obstacles, such as relatively high tax compliance costs. It was, therefore,
proposed in the 2008 Budget Review that a turnover tax system be implemented for micro businesses
with a turnover of up to R1 million per annum to simplify the tax compliance process. Similarly,
section 12E was introduced earlier in the Income Tax Act No. 58 of 1962 to offer additional income tax
relief to small business owners. Sections 12E(4)(a)(iii) and (d) and paragraph 3(b) of the Sixth
Schedule, however, prevent certain small business owners from making use of these concessions. This
article investigates these barriers to entry and explores possible solutions to the problems presented
by them.

http://reference.sabinet.co.za/webx/access/electronic_journals/jefs/jefs_v5_n2_a13.pdf

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