Industry updates | February 2022
Please take note of the following industry updates that may be relevant to you and your business.
COMPLIANCE AND ADMINISTRATION
Due dates for reporting and payments- February 2022:
TAX ADMINISTRATION
1. Second provisional tax returns
All individuals and companies with a February year-end are required to submit the second provisional tax return for the current 2022 tax year by the 28th of February 2022.
Please ensure that all financial information is up to date to submit accurate estimates. For individuals/ companies with a turnover of R1 million or less, SARS will offer a 10% leeway and for those with a turnover of R1million or more, a 20% leeway will be granted on the total tax liability for the year versus the two estimates submitted.
2. Reduction in income tax rate for Companies
The company tax rate will reduce to 27% for years of assessment commencing on or after 1 April 2022.
3. CIPC and SARS procedural deregistration
• Deregistration upon request:
In terms of the Companies Act, No. 71 of 2008 (Companies Act), a company or a third party may, under certain conditions, request the Companies and Intellectual Property Commission (CIPC) to deregister a company. This deregistration process may only be stopped and voided if an objection and valid reason(s) are submitted before the date of final deregistration. However, if a company was indeed deregistered, an application for the reinstatement of the company can be submitted to the CIPC. That stated recent amendments to the Companies Act limit the circumstances under which a company may be re-instated.
• Automatic deregistration:
An automatic deregistration of a company by the CIPC is triggered when two or more successive annual tax returns are outstanding. In such instances, the deregistration is due to non-compliance, and not upon ‘request’. Where a company was referred for deregistration due to non-compliance, the deregistration process will only be canceled upon the filing of all outstanding annual returns. Once the company has remedied the non-compliance, an application for final deregistration can be submitted to the CIPC.
• Voluntary deregistration
For a company to deregister at the CIPC and SARS, the following is required:
- CIPC compliant (annual returns must be submitted and fees must be paid).
- SARS compliant (all relevant tax returns must be submitted and amounts due must be paid).
Companies must regularise their CIPC and SARS affairs before the company can be successfully deregistered.
4. Denial of employees’ tax deducted
One of the reasons for the disallowance of employees’ tax deducted from an employee is the non-compliance status of the employer involved. Irrespective of the fact that the EMP501 reconciliations and IRP5/IT3(a) certificates were submitted and pre-populated in the taxpayer’s ITR12 income tax return. SARS is disallowing the employees’ tax claimed if the requested supporting documents listed below are not submitted:
• Employment contract/letter of employment from the employer with the entity letterhead stating the following:
- Physical address of the entity;
- Contact number of human resources to confirm employment; and
- PAYE reference number of the entity where the employee is employed.
• IRP5/IT3(a) employee income tax certificates;
• 3 months bank statements showing the salary received; and
• Salary payslips for 12 months or less if employment is less than a year.
Where SARS has disallowed employees’ tax deducted without requesting the abovementioned supporting documents, a dispute must be submitted within the prescribed timeframe and the abovementioned documents must be attached to the dispute.
5. Former SARS employee gets 12 years custodial sentence
A former employee of the South African Revenue Service (SARS) Bilal Shaik has received a 12-year custodial sentence for fraud, forgery, uttering, and money laundering, amounting to R6-million.
Shaik was sentenced for facilitating fraudulent VAT refunds to three companies. However, the money eventually ended in the bank account of Shaik who used the proceeds for personal gain.
A second accused, Kyle Nadasen representing Kyle Nadasen CC, was convicted of fraud, forgery, and uttering. He was sentenced to six years imprisonment, wholly suspended for five years, on condition that the accused is not convicted under section 4 of the Prevention of Organised Crime Act (POCA), during the period of suspension.
The third accused, Miloni Chetty, a sole member of ILONIM General Traders, was acquitted on all charges.
The court heard that the accused submitted fictitious invoices for the purpose of receiving an undue VAT refund.
The Commissioner of the South African Revenue Service (SARS), Edward Kieswetter, welcomed the harsh sentence handed down on the former SARS employee Bilal Shaik and Kyle Nadasen.
“SARS will not tolerate any criminal conduct by its employees. This is not negotiable, as taxpayers and traders should be able to trust the organisation and its employees to act with integrity. SARS is committed to making it hard and costly for anyone involved in criminal malfeasance on tax matters without fear, favour or prejudice. Such criminal conduct tarnishes the reputation of a vital institution of our democracy that relies on voluntary compliance by taxpayers and traders to fulfill its mandate of collecting revenue that can be used for the benefit of all South Africans, especially the poor and vulnerable,” Mr. Kieswetter said.
Domonique Ramos | 01 February 2021