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South Africa Plans To Extend COVID-19 Tax Relief Measures

By Joseph Boris · August 3, 2020, 5:51 PM EDT

South Africa's government presented draft legislation to extend tax relief for companies, including deferred payment of excise and payroll levies, to counter the effects of the coronavirus pandemic.

The National Treasury late Friday issued proposals that would lengthen, to 150 days from 90 days, a payment holiday on excise duties on alcohol and tobacco products by tax-compliant businesses. Tobacco sales have been prohibited since a nationwide lockdown began in late March, and the government in July reinstated a ban on alcohol trade.

The Treasury also proposed letting tax-compliant small and medium-size businesses defer payment of 35% of a payroll tax for another month, through Aug. 31. As a result of the extension, repayment of the deferred tax would begin in October and run through March 2021, Treasury said in a statement.

A third proposal called for extending by two months, to Sept. 30, a special tax exemption for relief funds directed at the pandemic. The measure took effect in April.

Additional tax proposals aimed at mitigating effects of the pandemic, which have been made by commentators but aren't included in specific COVID-19 tax bills, "will be considered based on their potential impact on the fiscal framework that has been approved by Parliament," Treasury's statement said. COVID-19 is the respiratory disease caused by the novel coronavirus.

The relief measures, which were initially set to expire at either the end of July or on Aug. 31, are part of the government's 500 billion rand ($29 billion) stimulus package formally presented in May.

The proposed extensions will require approval of members of the Standing Committee on Finance in the National Assembly, the lower house of South Africa's Parliament.

A National Treasury representative didn't respond to a request for comment.

Edgar Sishi, the National Treasury's chief director, said in early July that his agency was considering a number of new tax measures to help the government reach its goal of raising an additional 40 billion rand in revenue in coming years.

These included a possible wealth tax and how it relates to a land tax and estate duty, Sishi explained, adding that specific proposals would be conveyed when the government submits its 2021 budget in February.

Finance Minister Tito Mboweni has said the National Treasury has no plans to boost income, corporate or value-added taxes despite the pandemic's harm to the South African economy.

Over the weekend, South Africa surpassed 500,000 confirmed COVID-19 cases, which represents more than 50% of all reported coronavirus infections in Africa's 54 countries, according to data announced by Health Minister Zwelini Mkhize. The cases include 8,153 deaths, he said.

South Africa, with a population of 58 million, has the fifth-highest number of cases in the world, behind the U.S., Brazil, Russia and India, all of which are significantly more populous, according to a tally by Johns Hopkins University.

--Editing by Vincent Sherry. 

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