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SAIPA says the 2014 Budget Speech didn't do enough for professional service SMEs

by , 05 March 2014
It's exactly a week sinceFinance Minister Pravin Gordhan delivered his 2014 Budget Speech in parliament. While several days have passed since the speech experts and professional bodies like theSouth African Institute of Professional Accountants (SAIPA) are still scrutinising Gordhan's speech. Continue reading to find out why the institute believes the speech didn't favour SMEs who provide professional services.

SAIPA has this to say about Gordhan's 2014 Budget Speech and SMEs

In this article, we highlighted the ten key tax points that Gordhan made during his budget speech.

When it comes to SMEs, we mentioned that the minister said small businesses will get more support by receiving the following:
  • Increased support and tax relief for entrepreneurs and small businesses.
  • Strengthened incentives for industry, including funding for special economic zones.
  • Training and financial support for nearly 500 000 subsistence and small-holder farmers.

So what's SAIPA's problem with Gordhan's pronouncements?

In a statement, Ettiene Retief, chairperson of the National Tax and SARS Stakeholders Committees at SAIPA says while they applaud the additional support given to SMEs in the 2014 budget, they believe the minister failed to extend this support to those SMEs providing professional services.

Retief says professional services like accounting and bookkeeping, administration, software development, architecture and drafting are all vital to an efficient modern economy. But the easing of the tax burden for SMEs explicitly excludes many of these businesses.

'This is counterproductive because these types of small or micro businesses provide just the sort of services that foster the growth of larger businesses and thus increase employment,' says Retief in the statement.

Retief continues to say that professional services SMEs need more support because they also facilitate the transfer of skills.

He says this is crucial especially considering that 'many people in our country simply don't have the opportunity to attend a college or university but still have an immense contribution to make to the economy, given half a chance.'

Essentially, Retief is arguing that, without support from government (easing of the tax burden), small-scale professional services won't be able to prosper and make a meaningful contribution towards the economy.

It remains to be seen if government will give more support to SMEs providing professional services. Hopefully what SAIPA is raising will be taken into account in the next budget speech.

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