Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698833982331.pdf (South Africa)
Attention: the Committee Secretaries, Mr Allen Wicomb and Ms Teboho Sepanya (Standing Committee on Finance) and Mr Nkululeko Mangweni (Select Committee on Finance), 3rd Floor, 90 Plein Street, Cape Town 8000 or awicomb@parliament.gov.za / tsepanya@parliament.gov.za / nmangweni@p arliament.gov.za To: Hon.

J Maswanganyi, MP, Chairperson: Standing Committee on Finance (National Assembly) and Hon.
YI Carrim, MP, Chairperson: Select Committee on Finance (National Council of Provinces) From Dr Ramola Naidoo Email: Date: 3 July 2020 SUBMISSION on the Disaster Management Tax Relief Administration Bill (small businesses) [B12-2020] and B11-2020 My submission is in below after the text of the draft B12-2020 Bill To provide for tax measures in order to assist with alleviating cash flow burdens on tax compliant micro and small to medium sized businesses arising as a result of the COVID-19 pandemic and measures taken under the Disaster Management Act, 2002; to provide for the employees’ tax treatment of donations to the Solidarity Fund; to provide for a change in the value-added tax category of vendors to effect monthly returns and refunds; and to provide for matters connected therewith.
Definitions: ‘‘Solidarity Fund’’ means the Solidarity Response Fund, registered with the 15 Companies and Intellectual Property Commission as a non-profit company under registration number 2020/179561/08.

Donations to Solidarity Fund 5.
An employer may, for purposes of paragraph 2(4) of the Fourth Schedule to the Income Tax Act, deduct from remuneration so much of a donation to the Solidarity Fund made by the employer on behalf of the employee either— (a) during a period of three months commencing on or between 1 April and 1 July 45 2020— (i) as does not exceed 33.33 per cent of that remuneration per month after deducting therefrom the amounts contemplated in items (a), (b) and (bA) of that paragraph; and (ii) for which the employer will be issued a receipt as contemplated in 50 section 18A(2)(a) of the Income Tax Act; or (b) during a period of six months commencing on 1 April 2020— (i) as does not exceed 16.66 per cent of that remuneration per month after deducting therefrom the amounts contemplated in items (a), (b) and (bA) of that paragraph; and 55 (ii) for which the employer will be issued a receipt as contemplated in section 18A(2)(a) of the Income Tax Act.
My submission: The Disaster Management Act regulations Regulation 2 (6), Release of Resources, Government Gazette No 43107 GN 318, 18 March 2020, provide that all donations must be deposited into the Reconstruction and Development Fund.

(I dispute the process of the making of these regulations on a broader legal issue but it is instructive that the Solidarity Fund has been given a life of its own in conflict with this Regulation and in conflict with the PFMA, as below).
Section 13 (1)(g) of the Public Finance Management Act 1999 specifically excludes money received from donors from being deposited into the National Revenue Fund.

Instead subsection 13(1)(g) states that the money received must be deposited into the Reconstruction and Development Fund.

On what legal basis was the Solidarity Fund established as a CIPC non- profit company instead of an account directly controlled by the National Treasury?
There is a media report in relation to the UIF Fund which paid out a large sum of money to a fraudulent claimant who created a company and fictitious employees in order to obtain UIF funds allegedly for “employees”.

A deposit of donor funding into the RDP Fund does not necessarily mean therefore that fraud will not take place.
While it is understandable that the Solidarity Fund may have noble intentions, there has to be clarity on whether donors can in future disburse funds in ways other than through the Reconstruction and Development Fund.

Apart from my submission on the Solidarity Fund, there must be innovative small businesses who can benefit from seed grants and business training instead of funding small businesses which would inevitably have failed without COVID-19.
The same businesses who have failed may excel in other ventures that support green technology, intellectual property, and any business that supports climate change risk-mitigating innovation.

It is of concern to me as an intellectual property lawyer that CIPC has yet to take measures to amend the Patent Act to provide for compulsory licensing in terms of articles 31 and 31bis of the World Trade Organization’s TRIPS Agreement.
Further the government has committed the Republic to participate in the WHO’s Digital Access Pool and the Global Procurement Pool.

This is good but we may end up with a huge financial commitment (as we do for the pharmaceutical drugs for HIV/AIDS programme) without benefiting small businesses and others who are not registered as companies but who may have groundbreaking healthcare products (not patented) and without any funding.
Many organs of state after buying PPE products at vastly-inflated prices, most of which are imported.

The N95 masks, if legal and not fake, are subject to a patent registered by 3M and licensed to manufacturers.

We need to identify priorities for funding based on a win-win objective (and even encouraging small businesses to pool their resources and ideas) rather than being primarily an importer, and funding small businesses on an arbitrary basis and based upon applications.
B11-2020 and B12-2020 I also oppose tourism for hunting of wildlife and these businesses should not receive any tax benefits or funding through the other Bill (for employers B11-2020) before the committee.

Climate change must feature in this Bill as well rather than simply leaving it to the Carbon Tax Act, the National Treasury and other departments must be proactive to fund disaster risk reduction programmes relating to natural disasters such as the drought, floods, fires, and earthquakes.
I am concerned that these long term risks are being sidelined by COVID-19.

Kind regards Ramola Naidoo (Dr) Email: