Assistance for businesses that may be in distress. Have you received anything to date?
- Using the tax system, government will provide a tax subsidy of up to R500 per month for the next four months for those private sector employees earning below R6,500 under the Employment Tax Incentive. This will help over 4 million workers.
- The South African Revenue Service will also work towards accelerating the payment of employment tax incentive reimbursements from twice a year to monthly to get cash into the hands of compliant employers as soon as possible.
- Tax compliant businesses with a turnover of less than R50 million will be allowed to delay 20% of their pay-as-you-earn liabilities over the next four months and a portion of their provisional corporate income tax payments without penalties or interest over the next six months. This intervention is expected to assist over 75 000 small and medium-term enterprises.
- Government is exploring the temporary reduction of employer and employee contributions to the Unemployment Insurance Fund and employer contributions to the Skill Development Fund.
- The Industrial Development Corporation has put a package together with the department of trade, industry and competition of more than R3 billion for industrial funding to address the situation of vulnerable firms and to fast-track financing for companies critical to our efforts to fight the virus and its economic impact.
- The department of tourism has made an additional R200 million available to assist SMME’s in the tourism and hospitality sector who are under particular stress due to the new travel restrictions.
Other economic interventions
Following consultation with social partners, government has also set up a Solidarity Fund, which South African businesses, organisations and individuals, and members of the international community, can contribute to. The fund, chaired by Gloria Serobe, a well-known force in rural development, will complement related public sector efforts. Serobe is the founder of the 26-year-old Wiphold, who transformed the lives of agricultural women in the Eastern Cape.
Debt relief fund for small businesses
A Debt Relief Fund to help alleviate the economic impact of the coronavirus on small businesses in South Africa is due to come into operation on Tuesday 24 March.
All small, micro and medium enterprises (SMMEs) may apply for relief on existing debts and payments. In order to be eligible, all applicants will be required to show an impact, or potential impact, of the virus on their business.
“This facility will also assist entities to acquire raw material, pay labour and operational costs. All these interventions will be structured to match the patterns of the SMME’s cash flows, as well as the extent of the impact suffered,” said Small Business Development Minister Khumbudzo Ntshavheni.
The fund is being established and administered by the Department of Small Business Development. According to the department, it has been “inundated” by enquiries from SMMEs about measures that could help them mitigate the enormous impact being felt by their businesses.
Organisations wanting to apply for assistance from the Debt Relief Fund must register on the SMME South Africa portal at www.smmesa.gov.za so that a database can be created. The portal will become operational on Tuesday 24 March.
“The department’s insistence on the use of the database is based on the need to track, monitor and strengthen the impact of business development support to SMMEs by both government and the private sector, during this period and beyond,” Ntshavheni said.
“In future, the database will also be used to apply for both financial and non-financial support, access information about business opportunities and market access support,” she added.
Coronavirus: ‘Distressed’ companies
Employment and Labour Minister Thulas Nxesi said individual companies in South Africa are becoming “distressed” due to the coronavirus and so the department has come up with a few measures to relieve some of the pressure.
Nxesi said that in order to assist the distressed companies, a period of reprieve will be considered in order for companies not to contribute to the UIF.
He said the Funds Temporary Employer/ Employee Relief Scheme will also be used to ensure that workers are not laid off.
“In instances where companies decide to close for a short period as a precautionary measure, the short-term UIF benefit will kick in. If a company contemplates a short term shut down, they are required to inform the Unemployment Insurance Fund. Our team will visit these companies to provide assistance with the processing of the claims,” said Nxesi.
In instances where an employee has to be self-quarantined for 14 days due to the coronavirus, such leave will be recognised as a special leave which will be fully paid on condition that the reason for the quarantine meets the requirements and that an employee can apply for UIF benefits.
In an event that an employee is required to be quarantined for longer than 14 days as a result of having travelled or been in contact with an infected person, such a leave will be recognised as special leave and that employee will be eligible to apply for unemployment insurance benefits.