English |  
ROSA
Wines of South Africa
Trade and Investment
 
 
 
 
 
 
TRADE AND INVESTMENT OPPORTUNITIES IN SOUTH AFRICA

Tax and Reporting

Tax Registration for Businesses

New enterprises must file with the South African Revenue Service (SARS) for the following taxes: provisional income tax, value-added tax (VAT) and employees’ tax, namely standard income tax on employees (SITE) and pay as you earn (PAYE).

For corporate entities, the Registrar of Companies or Close Corporations notifies SARS of the incorporation of a new business enterprise once the registration procedures with the relevant Registrar’s office have been processed. The business entity is then automatically registered as a provisional taxpayer and issued with a registration number. Every enterprise must appoint a public officer within one month after commencing business activities in order to represent it in all dealings with the revenue authorities. The public officer is designated as representative taxpayer in respect of the income and related tax obligations of the entity. The public officer appointee must reside in South Africa and approval of the appointment should be obtained from the Commissioner for SARS.

Reporting

Business entities are required to file annual income tax returns with SARS. Most file their returns with the Receiver of Revenue in the jurisdiction in which they operate. If the SARS office is not equipped to handle your volume of business, they will refer you to the nearest office that can.

Each business entity may select its own financial year-end. Natural persons are not entitled to this privilege – their tax year runs from 1 March to 28 February. Two provisional tax payments based on an estimate of annual income are made during each financial year. The first provisional payment is made after six months of the current financial year have elapsed and the second at the end of the financial year.

For the first payment, the estimate of taxable income may not be less than the ‘basic amount’, which is the taxable income reflected in the most recent assessment received from the Receiver of Revenue. In the case of a new enterprise, the basic amount will be nil. If, at the time of making the second provisional payment, the estimate of taxable income is less than 90% of the actual taxable income for the year and less than the basic amount, the taxpayer will be liable for an additional penalty tax of 20% of the difference between the actual tax paid and the lesser of the tax on the basic amount and the tax on 90% of the actual taxable income. To avoid this, it is best to base the estimate for the second provisional payment on the basic amount.

A third payment may be made six months after the financial year-end for corporate entities and seven months thereafter in the case of natural persons to reconcile estimated income with actual income. Interest accrues from the due date of the third payment on any underpayment of tax for the year concerned. For corporate entities, a copy of the audited financial statements of the enterprise, signed by the auditor and the public officer of the enterprise, must accompany the return, as well as any other documentation necessary to
support the information contained in the return. The aim of SARS is to issue assessments within three months after the filing of returns.

The investigation division of SARS assesses all income tax returns referred to it by the local tax offices. It also conducts detailed tax audits on a random basis and in circumstances where it is suspected that a return contains material irregularities or omissions.

Taxable Income

Income tax is calculated on an enterprise’s taxable income, earned from South African as well as foreign sources. Tax is residence-based. The rate of corporate income tax was recently reduced to 28% (previously 35%). Companies are not entitled to any rebates except for foreign royalties and foreign taxes paid.

Companies are also liable for secondary tax on companies (STC) at 12.5% in respect of all dividends declared after 13 March 1996.

 
Ms. TSD Nxumalo Consul-General
More Information
Statistics South Africa
South Africa Reserve Bank
South African Revenue Services
Johannesburg Stock Exchange
Government Online
South African Airways
South African Tourism
South Africa Broadcasting Corporation
Trade and Investment of South Africa (TIISA)
Public holidays in South Africa
Study in South Africa
South African Links
 
© South African Consulate-General Milan, Rome | Disclaimer