Gordhan focuses on developing SMEs

2014-02-27 00:00

AS his predecessor Trevor Manuel did, Pravin Gordhan has lent his ear to tips from taxpayers.

As a result of this, the minister has focused sharply on the development of small and medium-sized businesses (SMEs).

“[Government] must offer incentives … to help small businesses”, was the plea from Sharon Bosii from Pretoria.

Gordhan agreed with Bosii and allocated almost R7 billion over three years to support this sector.

In doing so, his department has accepted the recommendations of Judge Dennis Davis’s tax committee to ease the burden. They recommend that:

• The turnover tax regime will be amended to further reduce the tax burden on micro-enterprisers; and

• Consideration is being given to replacing the graduated tax structure for small business corporations, with a refundable tax compliance credit.

Rules relating to access to foreign capital will be eased to enhance support for entrepreneurial development, said Gordhan. Amendments will also be made to the venture capital tax regime.

He said that tax relief through grant-making will also be given to organisations involved in small enterprise development, and as a complementary measure grants received by small and medium-sized enterprises will be tax exempt, regardless of the source of the funds.

Good news for anyone who dreams of owning a small business is that government intends to create an environment that supports both informal traders and entrepreneurs who want to develop small businesses. It will promote the development of basic entrepreneurial skills and help those who lack formal opportunities.

The department said red tape and bureaucracy are hindrances to doing business, especially for small and medium-sized firms. It aims to reform the system, reducing compliance costs and facilitating access to equity finance.

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