Covid-19: Tax relief proposed by the President

The address by President Cyril Ramaphosa on Monday, 23 March 2020, set out certain fiscal relief measures to help small and medium enterprises (SMEs) and vulnerable firms mitigate cash flow constraints as a consequence of the COVID-19 outbreak. Certain of these measures will be implemented through the tax system and aim to use the tax system as a means of easing the liquidity constraints currently faced by businesses. Specific detail on these measures will be published by National Treasury in the coming days.  We provide a summary of the tax proposals set out in the address by the President below.

Support for businesses:

  • Pay as you earn

  • SMEs with a turnover of less than ZAR50 million‑

    • may defer 20% of their prospective pay-as-you-earn (PAYE) liabilities over the next four months; and
    • may defer a portion of their provisional corporate income tax payments without penalties or interest over the next six months. 

    The deferral of provisional tax payments should apply to the first and second provisional tax payments as well as potentially the third top-up payment.

    In order to qualify for these deferrals, the enterprise must be fully tax compliant.  Enterprises can check their tax compliance status via SARS eFiling.  We look forward to additional clarity around whether an application will need to be submitted to SARS or whether the relief applies automatically.

Support for employers and employees:

  • Employee Tax Incentive

    overnment has proposed an additional tax subsidy in the amount of up to ZAR500 per month for the next four months per qualifying employee in the private sector. 

    The employment tax incentive (ETI) is paid to employers who employ qualifying employees (including the youth) and is considered a labour cost sharing mechanism between government and the private sector to incentivise employment.  The existing ETI is aimed at supporting qualifying employees who earn below ZAR6 500 per month on a sliding scale based on salary where the employer is registered for Employees Tax.

    The employer is entitled to reduce the total amount of its PAYE liability by setting off the ETI amount calculated in respect of that month.  Where there is no PAYE to set off against the ETI amount, the employer will be entitled to a reimbursement of the total ETI amount available as at the end of each PAYE reconciliation period.

    A further proposal aims at reducing the reimbursement period to a monthly period.

  • Compensation Fund

    Any employee who falls ill pursuant to exposure to Covid-19 at work will be entitled to claim from the Compensation Fund.  Broadly speaking, claimants are required to include such compensation in their gross income for tax purposes.  The amount is, however, exempt from normal tax in accordance with section 10(1)(gB) of the Income Tax Act.

  • UIF – Temporary Employee Relief Scheme

    Government proposes utilising the Temporary Employee Relief Scheme (TERS) to enable companies to pay employees and avoid retrenchments.  TERS was launched in December 2019 and is aimed at assisting businesses who face temporary constraints that will result in retrenchments.  The allowance will be in the form of a wage payment directly to employees.
    This should support SMEs and other vulnerable firms who are faced with a loss of income to provide support to workers.

  • UIF and SDL

    Government is investigating a reduction in employer and employee contributions to the Unemployment Insurance Fund and a reduction in Skills Development Levies.

    The proposal entails using actuarial reserves in the Unemployment Insurance Fund to support workers of SMEs and vulnerable firms who are faced with loss of income and whose employers cannot provide support. 

The relief outlined by the President to aid SMEs and vulnerable firms and employees during this time is welcomed. We will provide an update as more detail becomes available. 


These materials are provided for general information purposes only and do not constitute legal or other professional advice. While every effort is made to update the information regularly and to offer the most current, correct and accurate information, we accept no liability or responsibility whatsoever if any information is, for whatever reason, incorrect, inaccurate or dated. We accept no responsibility for any loss or damage, whether direct, indirect or consequential, which may arise from access to or reliance on the information contained herein.

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Webber Wentzel > News > Covid-19: Tax relief proposed by the President
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