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October 4, 2018
2018-1964

South African Revenue Service to impose administrative penalties for outstanding corporate income tax returns

The South African Revenue Services (SARS) has recently indicated that it will be imposing administrative penalties from December 2018 for outstanding corporate income tax returns, which follows the SARS media release of 16 April 2018, pertaining to the potential prosecution of non-compliant taxpayers.1

The administrative penalties for a default of this nature range from R250 to R16,000 per month that the non-compliance continues, depending on the tax position of the company (i.e., the company's assessed loss or taxable income).

It is important to note that it is mandatory for registered companies to submit their income tax returns to SARS for assessment. If a company is dormant, it is still required to submit any outstanding returns prior to 2018 to prevent a penalty being imposed.

Though a dormant company may not be required to submit a 2018 income tax return based on the criteria for the exception in 2018 as set out in Notice 600 of 15 June 2018, it is recommended that a company continues submitting income tax returns for the duration of its existence.

Next steps

Taxpayers are encouraged to make use of the Tax Compliance Status (TCS) system on SARS e-filing to ensure that they are fully compliant. Obtaining tax clearance certificates from SARS can provide some assurance to stakeholders not involved in the tax compliance function.

Endnote

1 See EY Global Tax Alert, South African Revenue Service establishes new initiative to prosecute non-compliant taxpayers, dated 26 April 2018.

For additional information with respect to this Alert, please contact the following:

Ernst & Young Advisory Services (Pty) Ltd, Cape Town

  • Paul Daniels
    paul.daniels@za.ey.com
  • Russell Smith
    russell.smith@za.ey.com
  • Clyde Newman
    clyde.newman@za.ey.com

Ernst & Young Advisory Services (Pty) Ltd, Johannesburg

  • Warren Taylor
    warren.taylor@za.ey.com

Ernst & Young Advisory Services (Pty) Ltd, Bloemfontein

  • • Emile du Toit
    emile.dutoit@za.ey.com

Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London

  • Rendani Neluvhalani
    rendani.mabel.neluvhalani@uk.ey.com
  • Byron Thomas
    bthomas4@uk.ey.com

Ernst & Young LLP, Pan African Tax Desk, New York

  • Dele A. Olaogun
    dele.olaogun@ey.com

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