Corporate income tax

Corporate income tax is the tax amount that companies are liable to pay to SARS for trading as a company in South Africa. The corporate income tax returns are filed annually, within a year after your company’s financial year has ended.

These returns are submitted by using the data from your Annual Financial Statements and Tax Calculations. Should your submitted income tax return be selected for verification (by means of an Income Tax Verification), we will handle the verification and further audit queries (if any) on your behalf.

Provisional tax returns

Provisional tax is SARS’ way of collecting corporate income tax bi-annually instead of once off when the income tax return is submitted. It is a method of paying the income tax liability in advance, to ensure that the taxpayer does not have a large tax debt on assessment. This assists with cash flow for both the Taxpayer as well as for SARS.

Provisional tax returns are due 6-months into the year (1st provisional tax return) and at year-end (2nd provisional tax return). When the actual liability calculated with completion of the Annual Financial Statements is higher than the amount of provisional tax paid within the above two periods, a third provisional tax payment may be made 6 months after year-end. When an overpayment has been made during the first two provisional periods, SARS will refund the overpayment to the Taxpayer.

Dividends tax

Dividends are a way to share your company profits with the shareholders of your company. When your company declares dividends to its shareholders, a 20% withholding tax on the dividends declared to individuals and trusts is payable to SARS.

This amount is payable by the company at the end of the month following the month in which the dividend was paid. If the beneficial owner of the dividend is a company, the 20% tax is not applicable, but a dividend tax return must still be submitted to SARS.

Value Added Tax (VAT)

When a business receives more than R1 million of income during any 12-months, they are liable to register for VAT. VAT cycles can be monthly, bi-monthly or half-yearly.

Depending on the VAT cycle of your company, the VAT return (VAT201) and payment are due on the last day of the month following the month of your cycle. Should your VAT return be selected for verification, we will attend to the verification (and audit if selected for audit) on your behalf.

Payroll taxes

Employers are liable to deduct PAYE from an employee’s salary as soon as they work more than 22 hours a week, or if they are only employed by one employer. Employers must also be registered for UIF, and if their annual salaries are more than R500,000 they must register for SDL. Pay as you earn (PAYE), Unemployment Insurance Fund (UIF) and Skills Development Levy (SDL) payments are submitted to SARS by means of an EMP201.

EMP201’s are due by the 7th of the month following the month in which salaries were paid. All payroll taxes (UIF, PAYE and SDL) are then submitted and paid over to SARS. In October and May each year, a bi-annual and annual EMP501 return respectively must be submitted to SARS to reconcile the monthly EMP201’s for the 6-month periods which ended in August and February.

Annual Financial Statements

Let OCFO handle the complex task of compiling financial statements under IFRS or IFRS for SMEs. Free up your internal finance team and let us manage audit queries, adjustments, and finalization, ensuring compliance and accuracy. This allows your team to focus on the current year’s financial goals while we take care of the previous year’s reporting.

For more details, visit our Annual Financial Statements page.

Stay compliant and avoid tax risks with OCFO’s expert support.