1. Introduction
1.1 BUSA (Business Unity SA) represents the united interests of organized business. Reference is made to a Draft Explanatory Memorandum on the Small Business T ax Amnesty and its accompanying Bill, on which comment is invited by the end of May 2006. BUSAISACOB commends the efforts by SARS to broaden the tax base, enable small businesses to regularize their tax obligations, foster a tax compliance culture, and facilitate participation in the taxi recapitalisation programme.

1.2 Except for those BUSA constituents who represent historically marginalized businesses, it is unlikely that many other members of BUSA will be affected by the proposed amnesty. None the less, the importance that is attached to the proposed measure has lead to BUSA and its constituents alerting their members to the proposed amnesty. It is hoped thereby that the constituent members will, in turn, publicize the proposed amnesty in their newsletters and bulletins, the readership of which extends well beyond their business members.

1.3 BUSA submits that the efficacy of the amnesty programme will depend to a large extent on the mounting of a publicity campaign designed to persuade currently non - tax compliant businesses of the advantages in regularizing their tax status (e.g. access to the taxi recapitalization programme, BEE compliance rating).

2. Administrative Requirements
2.1 Part III of the Bill sets out the period under which applications may be submitted (10 months), and the information (taxable income, employee's tax, VAT, UIF, SOL) required from any amnesty applicant Since the remuneration paid to their employees is unlikely to exceed RO,5 million in anyone year, the SOL obligation will probably not apply, though a burden of proof may still be required. It is evident that the legislation accepts the prospect of there being scant records available to prospective applicants since provision is made for the furnishing of 'estimates'.

2.2 This alone suggests that the keeping of records by such small business operators is minimal. Accordingly, concern must be voiced as to the sustainability of the exercise once the 'newcomers' to the tax system have complied with the amnesty requirements.

BUSA/SACOB would argue that a determined education programme designed to strengthen record keeping skills by small business must be undertaken by SARS. In addition it would seem necessary to give further consideration to the simplification of the tax procedures. Unless these measures are pursued, it is likely that the compliance burden on small business for regularizing their tax affairs will continue to remain an important determinant over decisions to consider applying for the tax amnesty.

3. Tax Amnesty Levy
Following on from the points made in 2 above, BUSA/SACOB believes that the proposed amnesty levy should be reconsidered. Any incentive to induce small business to regularize their tax affairs must surely be an incentive pure and simple to which no penalty is attached. It may well be counter-argued that the reward for tax regularization through the amnesty process will be access to the benefits associated with taxi recapitalization and BEE compliance, but for those for which such rewards do not apply, the decision to take advantage of the amnesty carries with it a compliance obligation and a penalty. BUSA/SACOB believes that the proposed levy imposition should be reconsidered

4. Technical issue
On a technically related issue, it is suggested that the wording of Part VI, clause 11 (a) be examined. The wording in respect of 'amounts received by... during the qualifying period, from the carrying on of any business' might appear to have ramifications for labour brokers / contractors. It would appear necessary to clarify the possible overlap that exists between the 'carrying on of a business' and the 'remuneration' received by a labour broker or contractor.

5. Summary
BUSA/SACOB believes that the proposed amnesty is a positive measure by SARS to enhance tax compliance and in particular serves as a practical step towards accommodating the compliance obligations associated with the taxi recapitalization programme and the BBBEE compliance needs.
The amnesty provisions must be accompanied by measures to ensure the sustainability of tax compliance obligations. Those measures entail education and tax compliance simplification. Business has misgivings over the possible negative effect of imposing a 'tax amnesty levy.'