6 July 2017

SARS Tax FAQ and Tax Terminology

FATCA – Foreign Account Tax Compliance Act

OECD – Organisation for Economic Cooperation and Development

AEOI Administrative penalties – Automated Exchange Of Information – If you are a Reporting Financial Institution (RFI) and you have missed the deadline of 31 May 2017 to report to SARS the financial information with respect to reportable accounts and declaration under the US Foreign Account Tax Compliance Act (FATCA) and the OECD Common Reporting Standard (CRS), you may be liable for penalties.

PAYE – Pay As You Earn

Is it legal for SARS to raise queries/document demands for returns older than 5 years? Yes, and they do

1) Private Company

1.1) What is a Private Company?

Most foreign investors set up as a Private Company, as they require the least amount of annual formalities. They must at least have one director and shareholder and membership is no longer restricted to 50. The directors do not need to be South African residents or nationals.

1.2 How long does it take to register a Private Company?

7-10 working days (5 working days for the name reservation and 5 working days from the date of submission to finalize the registration).

2) Personal Liability Company

2.1) What is a Personal Liability Company?

The directors and past directors (where applicable) of such Companies are jointly and severally liable together with the company for any debts and liabilities arising during their periods of office.

2.2) How long does it take to register a Personal Liability Company?

15 working days (5 working days for the name reservation and 10 working days from the date of submission to finalize the registration).

3) Non-Profitable Company

3.1) What is a Non-Profitable Company?

A company incorporated for public benefit or other object relating to one or more cultural or social activities, or communal or group interest and the income and property of which are not distributable to its incorporators, members, directors, officers or persons related to any of them.
3.2) How long does it take to register a Non-Profitable Company?

15 working days (5 working days for the name reservation and 10 working days from the date of submission to finalize the registration).

4) Company amendment

4.1) What is a Company amendment?

When any changes are made in respect of a registered Company, it is necessary to notify the Registrar of Companies office. (e.g. Company name change, director change, financial year-end, etc.)

4.2) How long does it take to do a Company amendment?

  • a)  Name Change:  20 working days (5 working days for the name reservation and 15 working days from the date of submission to finalize the application).
  • b)  Director change:  5-10 working days from the date of submission to finalize the application.
  • c)  Address change:  1 working day from the date of submission to finalize the application.
  • d)  Financial year end change:  1 working day from the date of submission to finalize the application.

5) Close Corporation amendment

5.1) What is a Close Corporation amendment?

When any changes are made in respect of a registered Close Corporation, it is necessary to notify the Registrar of Companies office. (e.g. Close Corporation name change, member change, financial yearend, etc.)

5.2) How long does it take to do a Close Corporation amendment?
a)  Name Change:  35 working days (5 working days for the name reservation and 30 working days from the date of submission to finalize the application).

  • b)  Member change:  5-10 working days from the date of submission to finalize the application.
  • c)  Address change:  1 working day from the date of submission to finalize the application.
  • d)  Financial year end change:  1 working day from the date of submission to finalize the application.
  • e)  Principle business change:  15 working days from the date of submission to finalize the application.

6) Re-instatement of Companies and Close Corporations

6.1) What is a re-instatement?

Once a Company or Close Corporation has been finally deregistered, it may apply for restoration where after all outstanding information (including annual returns) must be lodged. Under the regime of the Companies Act 1973, Companies and Close Corporations who wanted to restore a Company had to apply to the High Court of South Africa for such restoration. The Companies Act 2008 has simplified this process immensely in order to assist the business world in preserving their Companies and Close Corporations.

6.2) How long does it take to do a re-instatement?

30 days giving clear notice for the local newspaper advertisement and 30 working days from the date of submission to finalize the application.

7) De-registration of Companies and Close Corporations

7.1) What is a De-registration?

If your company or close corporation ceases to operate, you may deregister it with the Companies and Intellectual Property Commission (CIPC). It can also be dissolved as result of liquidation. Deregistration implies that a business ceases to be registered as either a company or close corporation (no legal persona or standing) since it no longer is doing business and it has no outstanding assets or liabilities.

7.2) How long does it take to do a de-registration?

10 working days from the date of submission to finalize the application.

8) Annual Return for Companies and Close Corporations

8.1) What is an annual return?

In keeping with legislation, all Companies (Including External Companies) and Close Corporations is compelled by law to lodge an Annual Returne every year within the anniversary month of its official incorporation, even if dormant or not trading. Should a Company/Close Corporation fail to lodge its Annual Return, the Registrar may conclude that the Company/Close Corporation is not doing business or is not intending on doing business in the near future and will lead to deregistration.

8.2) What documentation do you require to submit an annual return?

  • a) Online submission consisting of the latest information regarding the Company/Close Corporation
  • b) Proof of payment – Can only be determined once the Annual Return status has been checked

8.3) How long does it take to submit an annual return?

The turnaround time for the submission is 48 hours upon receipt of the proof of payment.

9) Value-Added Tax

9.1) What is value-added tax?

Value-Added Tax is commonly known as VAT. VAT is an indirect tax on the consumption of goods and services in the economy. Revenue is raised for government by acquiring businesses to register and to charge VAT on the taxable supplies of goods and services. These businesses become vendors that act as the agent for government in collecting the VAT. VAT is presently levied at the standard rate of 14% on the supply of most goods and services and on the importation of goods.

9.2) How long does it take to register for value-added tax?

1 working days from the date of submission to finalize the registration (Only applicable if tax returns and amounts are up to date).

10) Employee Tax

10.1) What is employee tax?

Employee Tax, compromises of Pay-As-You-Earn (PAYE) and Standard Income Tax on Employees (SITE), refers to the tax required to be deducted by an employer from an employee’s remuneration paid or payable. The SITE element is not applicable with effect from 01 March 2012. The process of deducting or withholding tax from remuneration as it is earned by an employee is commonly referred to as PAYE. An employer who is registered or required to register with SARS for PAYE and/or Skills Development Levy (SDL) purposes, is also required to register with SARS for the payment of Unemployment Insurance Fund (UIF) contributions to SARS.

10.2) How long does it take to register for employee tax?

1 working day from the date of submission to finalize the registration.

11) Tax Clearance Certificate

11.1) What is a tax clearance certificate?

A tax clearance certificate is a certificate issued by SARS to a taxpayer confirming the taxpayer’s tax affairs are in order at the date of issue of the certificate.

11.2) How long does it take to apply for a tax clearance certificate?

1 working day from the date of submission to finalize the application (Only applicable if tax returns and amounts are up to date).

12) Workmen’s Compensation Fund

12.1) What is the workmen’s compensation fund?

The Unemployment Insurance Fund (UIF) provides short-term relief to workers when they become unemployed or are unable to work because of maternity or adoption leave, or illness. It also provides relief to the dependents of a deceased contributor.

12.2) How long does it take to register at the workmen’s compensation fund?

5 working days from the date of submission to finalize the registration.

13) Letter of Goodstanding

13.1) What is a letter of goodstanding?

A letter of goodstanding is a letter issued by the Workmen’s Compensation Fund to an employer confirming the employer’s account with the Workmen’s Compensation Fund is in order at the date of issue of the letter.

13.2) How long does it take to apply for a letter of goodstanding?

1 working day from the date of submission to finalize the application (Only applicable if all Return of Earnings and amounts are up to date).

 

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