Nelson Mandela Bay business chamber calls for VAT 'holiday'

The Nelson Mandela Bay Business Chamber — the  largest organised business formation in the region — is asking president Cyril Ramaphosa to give businesses and  South Africans a three-month VAT ‘holiday’

Chamber CEO, Nomkhita Mona said: “During these times of the Covid-19 crisis the Nelson Mandela Bay Business Chamber realises this is business unusual.

“Hence we have made unusual proposals to the highest office in the land.

“Whilst we recognise that the president has been making pronouncements on support to be made available to business we are of the view that there are other effective, practical ways in which this could be achieved.

“These could be achieved within a short space of time, which could have a meaningful impact on businesses and communities  who have already started feeling the pinch from the effects of the virus.”

Mona said in  light of the negative effects expected on the economy the chamber was asking for the VAT holiday.

“We have strongly recommended to the president that businesses and  South African society in general are given a three-month VAT ‘holiday’.

“As the slower-than desired economic growth rate was already putting pressure on the ability of many South Africans to have access to disposable income — or alternatively  no income whatsoever —  VAT seems like an important area to use to alleviate such.

“This is especially so since these savings could be useful in protecting some of the jobs expected to be affected by the pandemic.

“Under Chapter 14 of the Tax Administration Act, section 193 (2) [there are] provision for the compromise or write off of tax debts due to SARS if such action is required in the circumstances.

“This allows SARS to deviate from the strictness and rigidity of the general collection of debt rules, if it would be in the best advantage of the state to do so.

“While we agree with SARS that the Covid-19 pandemic should not be used by taxpayers as an excuse for non-compliance with the law, we are equally of the opinion that some level of reprieve on businesses would encourage a more ‘tax compliant’ organisation in the future,” she said.

Mona added that the chamber had also recommended  that the financial services sector consider  a collective sector-specific dispensation to assist consumers across SA.

“We are mindful of the country’s competition laws and are confident that creative solutions can be found without engaging in anti-competitive behaviour.

“We are also alive to the fact that each business would like to retain a certain level of uniqueness in its offering.

“For instance, the banking industry could consider giving their home loan clients a three-month bond repayment holiday  as well as extend the debt-repayment holiday to businesses on a variety of products they offer.

“The sectors should also be cautious not to be seen to be trading and riding on the coronavirus wave  in a manner that pits one against the other.

“This kind of crisis calls for business with a conscience.

“The idea is not profiteering but understanding that we are in this crisis together and that we need each other — as we face an uncertain new world order,” she said.

Mona said it was the chamber's understanding that in the disaster management act of 2002 there was no specific legislative provision for a “payment holiday”. 

“However, section 27 (2) makes a provision for the national government to act as it may deem fit.

“It is against this backdrop that we have urged the president to consider his power at this time and make a decision that could save many families from homelessness and a general state of hopelessness.

“We have noted that some banks are on record as having considered some form of temporary relief to some of their clients. This is commendable.

“We believe this is a solution that can be adopted by others including, but not limited to, the insurance and medical aid industries.

“We are not blind to the economic impact these recommendations would have on the business society of SA, like banks.

“However, it is during such a times of business unusual that as the human race we rally around each other,” she said.