All you need to know about business taxation in South AfricaEmma
Tax season is upon us, one of those niggling deadlines which seems to rear its head almost as soon as you cleared it off last year’s calendar. Taxation in South Africa is generally seen as fairly sophisticated, and follows world best practice in several regards. This includes the ability to file and query tax returns using a fairly advanced online system, and have a lot of your questions answered telephonically by staff at the South African Revenue Service. However, when tax season is underway – as it has been since the beginning of July – call volumes are high and online traffic can slow down the speed of the SARS website (http://www.sars.gov.za). It’s useful to know about certain deadlines regarding business taxation in South Africa so that you’re aware of what the revenue service will require of you and your company in the upcoming months.
- 1 September 2014 – 31 October 2014: In a few day’s time, Employer Interim Reconciliation will begin. During these two months, employers will be required to submit their Employer Reconciliation documentation for the ‘interim’ transaction period – the six month period between 1 March and 31 August. (Reporting on last year’s full tax year for employers closed on 30 May 2014).
Employer reconciliation is a requirement by SARS for taxation in South Africa by those companies deemed as employers. In order to successfully complete this recon, your company needs three things:
- Copies of your monthly Employer Declaration forms (known as EMP201s) for the period that is being reported on. These submissions should have been made monthly to SARS, usually by the HR department if your company has one. EMP201 forms give the revenue service an idea of how much money your company paid in salaries and wages for that month. Be aware of nuances around reporting on these forms – for example, casual and contract staff should be reported on separately from permanent staff salaries.
- Payments submitted: A record of corresponding payments for the reporting period must be provided as part of requirements of taxation in South Africa.
- Employee tax certificates (IRP5s) must also be generated by your company for each employee. Nowadays, these can be loaded immediately onto the employee’s eFiling account rather than manually generated and submitted.
Once your company has inputted this documentation, SARS will review your reconciliation. If it fails to balance across all three elements, it will issue you a letter saying your reconciliation submission was unsuccessful. You will then have an opportunity to correct and re-balance the recon if necessary.
- 26 September 2014: This is the final day for individuals making manual submissions to submit their tax returns. Therefore, taxation in South Africa requires your company to have prepared manual IRP5s well in advance of this date for all employees who will not be able to file their returns online.
- 21 November 2014: This is the overall deadline for individuals filing tax returns. Ensure that IRP5s for all employees are loaded onto the eFiling system well in advance of this date.
- Monthly – VAT forms: By the 25th of each month, your company is required to submit its VAT201 form for the period (if you are using eFiling, this deadline is extended to the 30th of the month). Any business that has taxable supplies of more than R1-million in any consecutive 12 month period is required to register and report on their value-added tax.
- Monthly – EMP 201 forms: As already mentioned, taxation in South Africa requires that employers submit these forms monthly. They are usually required near the beginning of the month (between the 5th and the 7th) so aim to have them done straight after your payroll run has been completed.
These are the deadlines facing your company between now and the end of the year. Ensuring that your submissions are accurate is another matter entirely — one that requires a trained professional. Taxation in South Africa also allows qualifying businesses to register for different tax methods such as turnover tax (a slightly simplified tax system for smaller businesses) or taxation for SBC’s (Small Business Corporations). You’re also required to register for other employer-related taxes such as PAYE (pay as you earn), UIF (Unemployment Insurance Fund) and SDL (Skills Development Levies).
Instead of trying to understand the complexities of all tax requirements for your business and simultaneously wearing all the other hats required of a business owner, you might consider outsourcing your tax requirements to a qualified finance executive. The Finance Team has a team of experienced financial professionals who can provide you with part-time or ad hoc assistance in a way that suits your company’s needs and budget.