Tax Breaks for Start-Ups Fall Flat in South Africa

July 25, 2017 Taxation in South Africa

Tax breaks for startupsPRETORIA – Tax breaks aimed at fostering a thriving small-business and start-up environment in South Africa have been labelled a resounding failure.

New information released by the South African Revenue Service indicates that the government’s endeavour to boost investment into small business has failed, as over the last two years only one entity has taken advantage of a special tax break for businesses making grants to small businesses.

Currently, an entity which makes grants to small businesses is able to enjoy tax exemptions, if it is registered for the exemption with tax authorities.

The businesses which receive the grants from a registered entity would also enjoy exemptions.

The program of exemptions was started in March 2015, and was intended to encourage a greater level of investment into small businesses.

Had the plan worked, it would have created a number of lucrative and progressive small businesses and start-ups.

However, since the launch of the program, only one entity has successfully registered for the exemption.

The South African revenue Service cannot reveal the details of the entity receiving the grant, nor about the extent of the tax break received due to privacy reasons.
However, despite the lack of details, tax experts have labelled the system as a failure.