On Monday evening President Cyril Ramaphosa announced that a nation-wide lockdown would come into effect at midnight on 26th March and extend to 16th April 2020.
The lockdown means that South Africans will not be allowed to leave their homes for 21 days except to seek medical care, collect a social grant or to go and buy food, medicine and other supplies.
That means that many businesses will have to close for 21 days.
The lockdown does not include healthcare workers (in both the private and public sectors), emergency services and others fighting the pandemic or assisting government in its response.
The list of those exempted from the lockdown includes “those involved in the production, distribution and supply of food and basic goods, essential banking services, the maintenance of power, water and telecommunications services, laboratory services, and the provision of medical and hygiene products,” Ramaphosa said.
While that encompasses a fair few companies, there are many more which will be adversely affected by closing their doors for three weeks.
As such, Ramaphosa has outlined special provisions which are being made available for smaller firms.
Perhaps most importantly, the Department of Small Business Development has made R500 million available immediately to assist SMEs who are in distress. Applications can be completed on the department’s website but the website has been struggling to stay online, likely due to the influx of traffic from SME owners.
The president also said that temporary reduction of employee and employer contributions to the Unemployment Insurance Fund and a reduction in employer contributions to the Skills Development Fund is being explored.
The South African Revenue Service is also working towards fast tracking employment tax incentive reimbursements from bi-annually to monthly. This is “to get cash into the hands of compliant employers as soon as possible,” said Ramaphosa.
Sticking with tax for a moment there is a tax break on the cards as well.
“Tax compliant businesses with a turnover of less than R50 million will be allowed to delay 20% of their pay-as-you-earn liabilities over the next four months and a portion of their provisional corporate income tax payments without penalties or interest over the next six months. This intervention is expected to assist over 75 000 small and medium-term enterprises,” said the president.
Government will also provide a tax subsidy of up to R500 per month for the next four months for private sector employees earning below R6 500. This move is expected to help 4 million workers.
Businesses in the tourism and hospitality sectors are currently severely impacted by not only the forthcoming lockdown but the national state of disaster that was announced last week.
As such, the Department of Tourism has made an additional R200 million available to SMEs in the tourism and hospitality sector.
Finally, the Industrial Development Corporation together with the Department of Trade, Industry and Competition have put together a package of R3 billion. This package will be used to help vulnerable firms and fast-track financing for companies critical in local efforts to fight COVID-19.
As of time of writing many of the initiatives outlined above are not live or inaccessible due to an influx of traffic. We advise you persevere and keep checking in on the websites linked above.
[Image – CC 0 Pixabay]