It is generally expected that the budget announcement about tax relief for certain small businesses and will encourage more entrepreneurs to enter the business.
The highly praised development is the recommendation that the turnover tax regime – which reduces the compliance burden on micro businesses with annual turnover of up to R1m – be made more generous to improve the participation of small businesses in the economy and the tax system. Accordingly, the government will adjust the rates and thresholds to make the turnover tax more attractive.
Micro businesses with a turnover of less than R335 000 a year will pay no tax. Noticeably, the limit has been increased from R150 000 the prior year. In addition, the tax payable on turnover generated between R750 001 and R1 000 000 has been reduced from R15 500 plus 6% to R6 550 plus 3%.