Ramaphosa broadcasts new measures to assist companies affected by pandemics and civil unrest

President Cyril Ramaphosa (Image: GCIS)

  • The government will fund small businesses that do not have sasria coverage after the looting during the recent riots in KwaZulu-Natal and Gauteng, President Cyril Ramaphosa said.
  • He also announced new tax measures, including an increase in the employment tax incentive to help businesses during the pandemic.
  • For small and medium-sized businesses, a "one-time payment for the survival of the business" could also come.

On Sunday night, President Cyril Ramaphosa announced a series of measures to help businesses affected by the pandemic, as well as those particularly hard hit by the recent riots in KwaZulu-Natal and Gauteng.

Ramaphosa said that "deliberate, planned and coordinated acts of violence designed to create the conditions for unrest" resulted in the loss of more than 300 lives, looting of shops, warehouses and factories, damage to critical infrastructure and disruption to the country's economy.

"We are still counting the cost of this violence and processing the destruction it has left behind. We have a duty to support the people affected by this violence and to make sure it never happens again."

While many companies are compensated by the state-owned SA Special Risk Insurance Association (Sasria), which covers damage to customers as a result of social unrest, many smaller companies are not insured.

Ramaphosa announced that the government would support these businesses, including informal ventures. The government has made funds available for this and will shortly announce a mechanism to support these companies.

“Many of these companies have lost everything and will not be able to rebuild on their own. We will not abandon them in their need, ”he added.

He also announced a number of other measures to help businesses recover from the pandemic

Payouts for business survival

Ramaphosa said small and medium-sized businesses affected by the pandemic will have access to a "one-time payment for the company's survival". Details of how this funding mechanism works were not disclosed.

Wage tax incentive

Ramaphosa announced that the Employment Tax Incentives (ETI) will be "extended" for a period of four months.

In force since 2014, the ETI encourages companies to hire workers by providing them with a Pay-as-You-Earn (PAYE) tax refund.

Currently, for every employee who earns less than R6 500 and is younger than 30 years of age, qualified employers receive R 1,750 per month in the first year of employment and R1 250 in the second year of employment from the SA Revenue Service (SARS). This is done by reimbursing the PAYE amount paid to SARS.

After 24 months the incentive for these workers is 750 R. For workers over 30 the incentive is also 750 R.

Ramaphosa says the incentive amount will now be increased by up to R750 per month.

"This will encourage employers to hire and retain employees, especially those in the retail and hospitality sectors who are hardest hit."

PAYE deferment

Paying PAYE tax is being deferred for a period of three months to provide additional cash flow to businesses, with an automatic deferral of 35% of PAYE liabilities for employers with sales less than R100 million.

Excise tax allowance

While ending the fourth alcohol sales ban on Sunday evening, Ramaphosa also announced that it would postpone the payment of excise taxes by the alcohol sector for a period of three months "to relieve the sector while it recovers".

Ramaphosa said the interventions are designed to provide as much relief as possible to individuals and businesses in need of assistance without detracting from South Africa's financial sustainability.

Ramaphosa also indicated that further initiatives are planned "to fight poverty, accelerate reform implementation, promote inclusive growth and create jobs". "We will be able to make further announcements on this shortly."

On Sunday evening he announced that the social welfare grant (SRD) would be reinstated until March 2022.

The grant of R350, administered by the South African Social Security Authority (Sassa), will also be extended to unemployed caregivers who are currently receiving child benefit.

Previously, anyone who received government support was excluded from SRD payments

After more than R16 billion had been paid to around 6.5 million monthly SRD recipients since May last year, the SRD expired in January 2021.

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