Tax and other incentives to small, medium, micro enterprises in South Africa.

Abstract

The promotion of Small, Medium and Micro enterprises (SMMEs) has

been identified as key strategy of government for employment

creation and income generation. For some time now small business

owners had to fend for themselves. Small business was neglected

and was in the main ignored by government. Since the 1994

democratic process the challenge for the new order has been to

create an enabling environment for the small business sector of the

economy. The historical neglect and the consequent policy vacuum

has had to be re assessed. To this end the 1995 White Paper on a

National Strategy for the development and Promotion of Small

Business in South Africa was the first major effort by government to

design a policy framework targeting the small business sector.

The promulgation of the Small Business Act in 1996 and the

establishment of the Ntsika Enterprise Promotion agency under the

aegis of the Department of Trade and Industry has attempted to

provide direction and facilitate the provision of Non Financial support

to the Small Business Sector. Various incentive schemes have been

developed and put into operation together with a range of tax

incentives to help promote Small Business. Eight years have passed

since the promulgation of the Small Business Act and the perception

that finance for SMMEs has been the greatest stumbling block to

development. However the failure of the vast numbers of micro

lending agencies have revealed that low levels of entrepreneurship

has led to their demise.

The provision of meaningful positive incentives need to be measured

and their effectiveness needs to be tested. This study will try and

identify the incentives available.