Treasury on further tax measures to combat the Coronavirus COVID-19 pandemic

Government recognises that the far-reaching lockdown measures to contain the spread of the coronavirus are having a significant impact on our economy. Most households and businesses have suffered a significant loss in their income, as they comply with the regulations giving effect to the National State of Disaster declared on 15 March 2020. Government is committed to helping households and businesses stay afloat during this difficult period, whilst it continues to limit the rate of infection, on a risk-based approach.

The Minister of Finance announced the details of an initial set of measures on 29 March 2020 to assist tax compliant businesses with cash flow assistance and provide an incentive for businesses to retain their lower-income employees. Since the announcement, economic conditions have worsened, and National Treasury and SARS have received a large number of requests for assistance, including requests from large businesses that are also experiencing substantial cash flow difficulty. National Treasury recognises that the short-term interventions announced in the first fiscal package do not go far enough  in assisting businesses or households through the crisis – especially as the lockdown has since been extended.

In line with the President’s address to the nation on 21 April 2020, the Minister of Finance provides more detail on the second set of measures that aim to assist individuals and businesses through the pandemic. There is a critical need for government interventions to assist with job retention and support businesses that may be experiencing significant distress.

The following set of measures will help businesses focus on staying afloat and paying their employees and suppliers. Assisting businesses now will ensure that our economy is in a better position to recover once the health crisis starts to subside. If businesses survive this testing time, the economy will be better placed to strive collectively towards economic growth that is inclusive (providing more opportunities for employment) and revenue generating (so that we are able to work towards improving the state of our fiscus). The measures are expected to provide around R70 billion in support, either through reductions in taxes otherwise payable or through deferrals of tax payments for tax compliant businesses. The interventions include:

  • Skills development levy holiday: From 1 May 2020, there will be a four-month holiday for skills development levy contributions (1 per cent of total salaries) to assist all businesses with cash flow. This provides relief of around R6 billion.
  • Fast-tracking of value-added tax (VAT) refunds: Smaller VAT vendors that are in a net refund position will be temporarily permitted to file monthly instead of once every two months, thereby unlocking the input tax refund faster and immediately helping with cash- flow. SARS is working towards having its systems in place to allow this in May 2020 for Category A vendors that would otherwise only file in June 2020.
  • Three-month deferral for filing and first payment of carbon tax liabilities: The filing requirement and the first carbon tax payment are due by 31 July 2020. To provide additional time to complete the first return, as well as cash flow relief in the short term, and to allow for the utilisation of carbon offsets as administered by the Department of Mineral Resources and Energy, the filing and payment date will be delayed to 31 October 2020, providing cash flow relief of close to R2 billion.
  • A deferral for the payment of excise taxes on alcoholic beverages and tobacco products: Due to the restrictions on the sale of alcoholic beverages and tobacco products, payments due in May 2020 and June 2020 will be deferred by 90 days for excise compliant businesses to more closely align tax payments through the duty-at-source system (excise duties are imposed at the point of production) with retail sales. This is expected to provide short term assistance of around R6 billion.
  • Postponing the implementation of some Budget 2020 measures: The 2020 Budget announced measures to broaden the corporate income tax base by (i) restricting net interest expense deductions to 30 per cent of earnings; and (ii) limiting the use of assessed losses carried forward to 80 per cent of taxable income. Both measures were to be effective for years of assessment commencing on or after 1 January 2021. These measures will be postponed to at least 1 January 2022.
  • An increase in the expanded employment tax incentive amount: The first set of tax measures provided for a wage subsidy of up to R500 per month for each employee that earns less than R6 500 per month. This amount will be increased to R750 per month at a total cost of around R15 billion.
  • An increase in the proportion of tax to be deferred and in the gross income threshold for automatic tax deferrals: The first set of tax measures also allowed tax compliant businesses to defer 20 per cent of their employees’ tax liabilities over the next four months (ending 31 July 2020) and a portion of their provisional corporate income tax payments (without penalties or interest). The  proportion of employees’  tax that can deferred will be increased to 35 per cent and the gross income threshold for both deferrals will be increased from R50 million to R100 million, providing total cash flow relief of around R31 billion with an expected revenue loss of R5 billion.
  • Case-by-case application to SARS for waiving of penalties: Larger businesses (with gross income of more than R100 million) that can show they are incapable of making payment due to the COVID-19 disaster, may apply directly to SARS to defer tax payments without incurring penalties. Similarly, businesses with gross income  of  less  than R100 million can apply for an additional deferral of payments without incurring penalties.

The following tax measures aim to assist individual taxpayers and to provide financial backing from the fiscus to donate to the Solidarity Fund:

  • Increasing the deduction available for donations to the Solidarity Fund: The tax- deductible limit for donations (currently 10 per cent of taxable income) will be increased by an additional 10 per cent for donations to the Solidarity Fund during the 2020/21 tax year.
  • Adjusting pay-as-you-earn for donations made through the employer: Employers can factor in donations of up to 5 per cent of an employee’s monthly salary when calculating the monthly employees’ tax to be withheld. An additional percentage that can be factored in of up to 33.3 per cent, depending on the employee’s circumstances, will be provided for a limited period for donations to the Solidarity Fund. This will lessen cash flow constraints for employees who donate to the Solidarity Fund.
  • Expanding access to living annuity funds: Individuals who receive funds from a living annuity will temporarily be allowed to immediately either increase (up to a maximum of 20 per cent from 17.5 per cent) or decrease (down to a minimum of 0.5 per cent from 2.5 per cent) the proportion they receive as annuity income, instead of waiting up to one year until their next contract “anniversary date”. This will assist individuals who either need cash flow immediately or who do not want to be forced to sell after their investments have underperformed.

The above measures will be given legal effect in terms of changes to the two bills mentioned in the Media Statement issued on 29 March 2020 – the Draft Disaster Management Tax Relief Bill and the Draft Disaster Management Tax Relief Administration Bill. Together with the Commissioner for SARS, National Treasury will also monitor developments and the need for any further requirements to assist with COVID-19 relief efforts

The table below provides a breakdown of the level of support provided by the tax measures and is split by measures that provide additional liquidity (in effect interest free loans) that are ultimately paid back to government and measures that provide additional subsidies and result in lower tax revenue.

Impact of COVID-19 tax measures:

Liquidity / interest free loan (R billion)

Revenue cost         (R billion)

Expansion of employment tax incentive to pay up to R750 to all employees with an income below R6,500 per month



Deferral of 35 per cent of PAYE liability for four months for businesses with expected gross income of less than R100 million



Deferral of 35 per cent of provisional tax payments for the next six months for businesses and the self-employed with expected gross income of less than R100 million



Skills development levy holiday for four months



A 90-day deferral for alcohol and tobacco excise duty due to be paid in May and June



Three-month deferral for filing and payment date of carbon tax



Case-by-case application for deferral






Grand total



The draft bills alongside their draft explanatory memoranda, will be published for public comment on the National Treasury ( and SARS ( websites by 30 April 2020.

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