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In a speech last night President Cyril Ramaphosa announced a massive R500-billion social and economic support package to help South Africa tackle the effects of the coronavirus pandemic.
Ramaphosa said the government has now embarked on the second phase of its economic response to stabilise the economy, address the decline in supply and demand and protect jobs.
A third phase, still to be unveiled, will later be implemented to drive the recovery of the economy as the country emerges from this pandemic, he said.
Small businesses can benefit from UIF support, tax relief and funding through Ramaphosa’s R500bn package
The measures announced last night by Ramaphosa include tax relief, the release of disaster relief funds, emergency procurement, wage support through the Unemployment Insurance Fund (UIF) and funding to small businesses.
The measures targeting small businesses that were outlined by Ramaphosa include:
- A R200-billion loan guarantee scheme which will be introduced in partnership with the major banks, the National Treasury and the SA Reserve Bank. This will assist enterprises with operational costs, such as salaries, rent and the payment of suppliers. Initially companies with an annual turnover of less than R300-million a year will be eligible. A number of the banks are ready to roll out the product before the end of the month. It is expected that the scheme will support over 700 000 firms and more than 3 million employees.
- R40-billion through the UIF’s special Covid-19 benefit to support employees whose employers are not able to pay their wages. So far, the UIF has paid out R1.6-billion, assisting over 37 000 companies and 600 000 workers.
- R2-billion in the form of loans, grants and debt restructuring to assist small businesses and spaza shop owners. So far, over R100-million in assistance has gone to small businesses, he said.
- A four-month holiday for companies’ skills development levy contributions, fast-tracking VAT refunds and a three-month delay for filing and first payment of carbon tax. To assist a greater number of businesses, the previous turnover threshold for tax deferrals is being increased to R100-million a year, and the proportion of Pay As You Earn (PAYE) payment that can be deferred will be increased to 35%. No penalties for late payments will be applicable if employers can show that they have been materially negatively impacted in this period.
- Businesses can tap the Industrial Development Corporation (IDC) facility to procure or manufacture personal protective equipment. So far, finance of R162-million has been approved to date.
Ramaphosa said The Minister of Finance will provide further details on the above and other tax-related announcements.
Featured image: South African President Cyril Ramaphosa (Governmentza via Flickr)