Due to the national lockdown that applies in South Africa, Small and Medium Enterprises (SMME’s) are negatively impacted. This is also affecting their employees. Please find some information that applies to most businesses. Current government assistance is split into two broad categories:

1. Assistance to employees

There are two areas where government is assisting employees. 

1. 1.1.Additional rebate applicable on employees earning below R6500 per month

Employer’s can obtain an additional R500 per month per employee rebate on their PAYE payment for South African employees earning below R6 500 per month.

This is to enable employers to retain these employees on their payroll.

Employers must be tax compliant but doesn’t need to be South African owned and there are no BBBEE rules that apply.

1. 1.2.UIF claims

Employees who lose employment due to COVID19 can apply for UIF payments based on a special dispensation.

There are no rules as to BBBEE or SARS compliance that applies, but employers must be UIF registered.

The UIF office will pay employers directly on a monthly basis, into a separate bank account, for the employer to then pay the employees. (Employers must send an e-mail to covid19ters@labour.gov.za to obtain the relevant documents for submission to the UIF office)

This will also apply to workers who are temporarily laid off due to COVID19.

There is sliding scales and maximum values that apply so employees will not receive their full salary, but a reduced value, as per the standard UIF rules. 

IMPORTANT: The employer must be able to prove a link to COVID19 that resulted in the permanent/temporary loss of employment of employees.

IN GENERAL ASSISTANCE TO EMPLOYEES APPLIES TO ALL BUSINESS IN SA THAT CAN PROVE A LINK TO COVID19

1. Financing opportunity for business

This option ONLY applies to 100% South African owned businesses. The original correspondence did require 51% Black Ownership, but this was removed. However please note that the minister did mention that the demographics of SA will be considered when approving financing options. Focus will also be on businesses owned by women and disabled persons.

There are 3 loan options available to SMME’s

• Business Growth facility for those producing essential products/services and who needs additional financing to ramp up production/delivery.
• SMME Relief Finance for general SMME business who can proof they are negatively affected by COVID19
• Restructuring of SEFA-funded SMME’s who has current loans from SEFA

Please note that this is a loan option at a rate of prime less 5% and each case will be reviewed on a case by case basis. There is a cumbersome application process in place and severe penalties if this is abused.

At PPHC Global we are here to assist clients in keeping their businesses operational. Please contact us if you need assistance on the above or any other business or tax related matters.