JOHANNESBURG – Prospects for the economy and sustainability of small and medium-sized companies are looking bleak. Where will the income come from to pay employees and current and future running costs?
A vast number of companies are retrenching staff, with possible exiting from contracts such as leases and other onerous obligations to keep themselves afloat. One of a company’s largest creditors is the SA Revenue Service (Sars).
There is value added tax, Pay As You Earn, the Skills Development Levy, Unemployment Insurance Fund contributions, income tax and dividend tax to be paid.
If you cannot afford to pay your employees, how will you meet these statutory obligations?
What is clear is that we are in the midst of a human disaster, and whether the powers that be acknowledge this or not, we are in exceptional times. This will have to be taken into account in any discussions with creditors and with Sars as far as debt compromises are concerned. In these circumstances, a taxpayer may be looking at the write-off and or extended payment terms, or new payment arrangements, and commercial rationale has to be foremost in their minds.