SARS recognizes the vital role that small businesses play in the economic growth, job creation, poverty alleviation and the improvement of living standards in South Africa. In the past all businesses had to register for income tax law irrespective of whether they were small or big businesses. In 2008, SARS announced initiatives in order to reduce the burden of tax compliance where businesses had an annual turn over of up to R1 million. SARS have initiated a simplified tax system which functions as a package that consists of turn over tax as a substitute for income tax, capital gains tax, secondary tax on companies and an increase in the value-added tax (VAT) compulsory registration threshold from R300 000 to R1 million. Companies have the option of using the turn over tax system or the current standard tax system. The turnover tax package includes an exemption from Capital Gains Tax (CGT), Secondary Tax on Companies (STC), increasing the threshold for VAT and further providing that all employees be registered for employees tax.

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