SMME R1m turnover tax regime to be reformed

The National Budget has proposed several measures to assist micro small and medium sized businesses SMMEs to grow into larger entities.The Budget Review says policies are designed to assist with the development of entrepreneurial skills and to create opportunities for more entrepreneurs to thrive. Special mention is made of the problems created by red tape and bureaucracy to enterprise development, especially for SMMEs.The turnover tax for SMMEs will be simplified and the tax thresholds adjusted, based on a recommendation from the Tax Review Committee headed by Judge Dennis Davis.The new proposal states that business with an annual turnover of less than R335 000 should not be taxed. The maximum tax rate for qualifying businesses with a turnover of less than R1m is also reduced from 6% to 5%.Other proposals include doing away with the requirement for businesses to opt in to the regime for three years and requiring annual, rather than biannual, tax returns.The Tax Review Committee has stated that the lower tax rates for small business corporations are not really effective and does not assist or make it cheaper for SMMEs to keep their tax affairs in order.Only 50 000 businesses and in some instances also to professionals who were not the intended beneficiaries, have registered for this regime.The committee has recommended replacing this tax initiative with an annual refundable tax compliance rebate.Government accepts this recommendation, subject to public consultation.

via SMME`s R1m turnover tax regime to be reformed – 2014 Budget | Moneyweb.

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