The tax compliance burden on small and medium enterprises - its existence and SARS' response thereto

Abstract

Small businesses have the potential to grow the economy, generate jobs and reduce poverty. However, these businesses face many constraints, including high tax compliance costs. Research has shown that the most important thing that government could do to encourage the growth of these entities would be to remove burdensome and inappropriate regulations and to make the regulatory environment friendlier to small businesses. This study reviews research studies undertaken in South Africa in respect of the tax compliance burdens/costs faced by small business as well as what the South African Revenue Services (SARS) and the National Treasury have done since 2001 to reduce these burdens. The tax compliance burdens identified and the recommendations made in these studies are then compared with the actions taken by SARS and the National Treasury, in order to establish whether they have responded to the burdens identified in these studies. This comparison reveals that SARS and the National Treasury have taken steps to address many of the burdens identified and are actively trying to reduce the compliance burden facing small businesses. In almost all cases, they have responded to the tax compliance burdens identified in the studies reviewed here. Examples of areas where SARS has not addressed or has only partially addressed the burden include the lack of software to assist small businesses with record-keeping and the calculation of the second provisional tax payment. However, this study did not consider whether the actions taken by SARS and the National Treasury were effective in addressing the tax compliance burden. This requires further research. AFRIKAANS : Klein besighede het die potensiaal om die ekonomie te laat groei, werk te skep en armoede te verminder. Hierdie besighede staar egter menige beperkinge in die gesig, wat hoë belasting nakomingskostes insluit. Navorsing het bewys dat die belangrikste ding wat die regering kan doen om groei in hierdie ondernemings aan te moedig, is om die lastige en onvanpaste regulasies te verwyder en ‘n meer vriendelike regulatoriese omgewing vir klein besighede te skep. Hierdie studie hersien navorsingstudies wat in Suid-Afrika onderneem is ten opsigte van die belasting nakomingslas/koste waar klein besighede sowel as wat die Suid-Afrikaanse Inkomstediens (SAID) en die Nasionale Tesourie sedert 2001 gedoen het om hierdie laste te verminder. Die belasting nakomingslas geïdentifiseer en die aanbevelings gemaak in hierdie studie word dan vergelyk met die optrede van die SAID en die Nasionale Tesourie, ten einde vas te stel of hulle het gehoor gegee aan die laste wat in hierdie studie geidentifiseer is. Hierdie vergelyking toon dat die SAID en die Nasionale Tesourie baie werk doen om die geïdentifiseerde las aan te spreek en aktief probeer om die nakoming van belasting wat van toepassing is op klein ondernemings te verminder. In byna alle gevalle het hulle gehoor gegee aan die nakomingslaste geidentifeer in die hersiene studies. Voorbeelde van die gebiede waar die SAID die las nie aangespreek het nie of slegs gedeeltelik aangespreek het, sluit in die gebrek aan sagteware om klein ondernemings te help met rekordhouding en die berekening van die tweede voorlopige belastingbetaling. Hierdie studie het egter nie oorweeg of die optrede van die SAID en die Nasionale Tesourie effektief was in die aanspreek van die nakoming van die belasting las nie. Dit vereis verdere navorsing.