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Manuel May Extend South African Tax Amnesty

by Robert Lee,, London

06 June 2007

South African Minister of Finance, Trevor Manuel, has decided to recommend an extension of the deadline for companies filing under the small business tax amnesty after meeting with leaders of five accounting and business organisations.

The Minister, who was accompanied by Commissioner of the South African Revenue Service, Pravin Gordhan, on Monday met with the South African Institute of Professional Accountants (SAIPA), South African Institute of Chartered Accountants (SAICA), South African Chamber of Business (SACOB), National Professional Teachers’ Organisation of South Africa (NAPTOSA), and the South African National Taxi Council (SANTACO) to hear their arguments for the amnesty to be extended.

The meeting was told that many potential applicants were unable to apply for the amnesty because more time was required to prepare financial statements and supporting documents. The organisations have made commitments that include utilising their own internal structures and channels to increase amnesty advocacy and education should the deadline be extended.

The Minister indicated that he would recommend a short extension and make an announcement in parliament on 7 June 2007 when he introduces the Taxation Laws Amendment Bill in the National Assembly.

The amnesty period took effect in August 2006 and closed on May 31, 2007. The scheme was available to businesses with a turnover of less than R10 million, and was designed to encourage small companies operating outside the tax system to tell SARS about undeclared income and to regularise their tax affairs. In return for not being punished by the tax and legal authorities, amnesty filers had to pay a 5% tax on their newly-declared income.

In the lead-up to the end of the amnesty, the government undertook a last minute campaign to encourage businesses to use the amnesty which saw several thousand SARS officials joined by members of the South African Police Service (SAPS) and officials from the Department of Home Affairs in 30 towns and cities. In all 4,160 small businesses were visited, resulting in over 1,000 new applications for amnesty. By the end of April, SARS had received more than 16,000 application forms from business owners.

SARS has warned that it will "assume a vigorous enforcement campaign" against businesses that are not tax compliant after the amnesty period has expired.

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