1. Introduction
According to a 2020 Trans Union report, as a result of the COVID-19 Pandemic, 95% of SMMEs (i.e., 2.55 million in RSA) reported a decrease in revenue attributed to the consumers’ inability to earn income. As a result, 90% of SMMEs are either struggling or temporarily closed. Only 2% reported an increase in revenue and 3% have stable revenue. Only 10% are operating as usual, and this is attributed to an investment in Research and Development and /or Innovation.
Based on our “Vision 2024” to be a smart modern SARS, we do not want to bring bureaucratic burden to an already decimated economic segment. To this end, we have developed a dedicated newsletter – “SMME CONNECT”. The objective of the newsletter is to share relevant information pertaining to your SMME’s tax affairs and interaction with SARS. We hope this information helps you better understand how to meet your compliance obligations. Our Vision 2024 is informed by nine strategic objectives, four of which are important for the SMME sector’s recovery from COVID-19 and future prosperity:
(1) Make it easy for taxpayers to comply and fulfil their obligation
(2) Provide clarity and certainty of tax obligations
(3) Modernise systems to provide seamless online digital services; and
(4) Use data for insights, risks, and improved outcomes
Through this publication and our efforts to modernise our systems – to become a smart modern agency – we hope that you will have more confidence in how we administer your tax/customs transactions. When you understand the tax administration process and what is expected of you, overall certainty about outcomes increases. Increased clarity and certainty leads to greater voluntary compliance. We acknowledge that the COVID-19 pandemic has impaired our ability to be physically “At Your Service” as we had to limit the number of taxpayer visits at SARS branches and promote digital channels. The silver lining, however, is that we have introduced innovative ways to interact with you and our other stakeholders like our digital channels and online platforms. Because Your Tax Matters, we need your help to become smarter in the way we help you to comply with your tax/customs obligations.
In this edition of “SMME CONNECT”, we include critical information to decrease your administrative burden so that you can focus on the “business of business”. The topics include: employer interim reconciliation; tax compliance; cargo and clearance procedures for traders and travellers; debt management; and a list of recent webinars that were hosted between September and December 2021. As an overview, we begin with an essential guide for SMME that details required compliance actions, at each stage of the compliance life cycle, for the different tax types.
2. Beginning with the essentials
As a member of the SMME segment you need to follow the compliance value chain/life cycle for all of the different tax/customs products you use (e.g., income tax; VAT; PAYE; etc.). This “chain” is made up of the different steps in your tax relationship with SARS from beginning to end as follows:
- Registration – get onto our system
- Declaration – tell us about your tax matters, accept or dispute our assessment of tax liability
- Payment – if we owe you money or you owe us
- Deregistration – if you liquidate/close your business
When you comply with your tax obligations, you place your business at an advantage by eliminating the potential cost of non-compliance and administrative penalties. The government’s response to COVID-19- highlights the importance of tax compliance as one of the qualifying criteria to benefit from the tax relief measures – you must:
· Be registered for all required tax types
· Submit all your tax returns on time
· Pay all your tax debt on time
The table below provides compliance information for each of the seven (07) tax products/types.
Tax type | Submission frequency | Tax form | Explanatory notes |
Company Income Tax (CIT) | Once a year as per company’s financial year end | ITR14 | The company has 12 months to submit the ITR14 after the financial year end. The financial year end is indicated on the company registration certificate from CIPC. |
Personal Income Tax (for self-employed individuals) | Once a year as announced by SARS during filing season. | ITR12 | Sole traders, partners in a partnership and self-employed individuals must declare their business income on their ITR12. |
VAT | Every two (2) months before the 25th | VAT201 | The period will be allocated at registration and some companies may be required to submit every month. |
PAYE | Monthly on or before the 7th | EMP201 | The submission is due within seven (7) days after the month the tax was deducted from the employee. |
Provisional tax | Twice a year | IRP6 | For companies: The first submission is due six (6) months from the start of the financial year. The second submission is due at the end of your financial year.
For individuals: the first submission is due 30thAugust and second submission is due 28/9 February of each year. |
Turnover Tax | Once a year | TT03 | The submission of turnover tax returns is done once a year in line with the company’s financial year-end or submission of the annual income tax returns, between 1 July and 31 January of the following year for individuals. |
Employer Reconciliation | End of October and end of May | EMP501 | First interim submission is due at the end of October and final submission end of May. |
3. A smarter SARS – making compliance easier
The necessities of modernising and offering our partners and stakeholders more efficient and simpler service channels during the pandemic has resulted in several notable system upgrades or new facilities. The following are a few examples of transactions that DO NOT require visits to our branches.
a) Tax Compliance Status (TCS)
You can request a TCS PIN via eFiling. The TCS PIN is valid for 12 months and you can share it with 3rd parties who need to verify your compliance status. Please visit the SARS TV YouTube channel for a video on more how to obtain a TCS PIN and to remedy non-compliance.
b) SARS Online Query System (SOQS)
This is an easy-to-use online platform accessible via the SARS website www.sars.gov.za. The SOQS assists taxpayers to raise queries with SARS without going into a SARS branch or calling the Contact Centre. To initiate a query, taxpayers need to complete the online form by selecting a Query Type, complete a set of required information fields, attach supporting documents, where necessary, and submit to SARS for processing and review. You can use the SOQS to:
· Request a tax number
· Submit supporting documents
· Submit a payment allocation
· Report new estate cases
· Register a tax representative
· Make tax compliance status requests
· Verify tax compliance status
c) Manage outstanding tax returns
As a business owner you are required to submit and declare your personal income during the Individual Filing Season which is due on the 31 January 2022 for Provisional Taxpayers. Remember, non-submission of your tax returns is a criminal offence, which may result in a fine, imprisonment or both. If you have outstanding returns, you may incur administrative penalties for non-submission. This will affect your tax compliance status, which may lead to SARS appointing third parties such as a registered bank to recover monies owed. You can easily remedy non-compliance through eFiling. It’s the same process as filing your current tax return. Make sure have the following supporting documents for the relevant outstanding periods:
· Employee Tax Certificates (IRP5/IT3(a))
· Medical aid certificate
· Retirement annuity fund certificate
· Investment certificate (IT3)
· Logbook where applicable
If you have administrative penalties, submit all outstanding returns, and apply for a Request for Remission (RFR). If your RFR is declined and you are not able to pay the outstanding amount in full, you can apply for payment arrangements via eFiling.
d) Debt Management: Payment Arrangement Request
Until recently, taxpayers could only make payment arrangements via a debt collector who had been appointed by SARS, in person at a SARS branch, utilising the debt management regional email addresses, or on the My Compliance Profile (MCP) on eFiling. This all changed on 10 September 2021 when SARS implemented the Enhanced Debt Management process to help taxpayers with outstanding debt to initiate a request for Payment Arrangement via eFiling for four tax types:
- Personal Income Tax (now available on the SARS MobiApp from 6 December 2021)
- Corporate Income Tax
- Value-Added Tax
- Pay-As-You-Earn (PAYE)
Administrative penalties can also be settled using this channel. This is a positive stride towards making it easy for SMMEs to comply with and fulfil their tax obligations.
Businesses can now initiate a payment arrangement request for outstanding debt on eFiling from the following sources: Statement of Account (SOA); SOA admin penalties; Return Work-Page; Notice of assessment; Notice of Assessment for administrative penalties; MCP functionality; Final demand letter; and Final demand reminder letter. The enhancements of the payment arrangement process on eFiling will enable taxpayers to:
- Initiate and simulate a payment arrangement, with an instalment plan of up to 36 months
- Supply the reason for the request and preferred method of payment
- Attach mandatory supporting documents where required
- Submit the request if they meet qualifying criteria
4. Continued commitment to increase clarity and certainty
The SARS taxpayer, traders, traveller, and SMME segment teams work collaboratively to develop pertinent compliance information in different formats, like webinars In August 2021, we launched a series of webinars on specific topics to educate small business, traders and travellers. We want to help you consume your voluntary tax compliance “elephant” one bite at a time. So, in keeping with “bite size” information, please refer to the SARS website and social media platforms for information on forthcoming webinars. For now, the following themes are available on the SARS YouTube channel:
- Understanding Tax Compliance Status
- Illicit Trade and Counterfeit Procedures
- Value-Added-Tax
- Turnover Tax
- Registration, Licencing and Accreditation
- Excise Compliance (e.g., products subject to excise – Petroleum, petrol, diesel, paraffin)
- Customs requirements for travellers
Follow us on Social Media to stay updated about #YourTaxMatters.
Facebook: sarstax
Twitter: @sarstax
LinkedIn: sarstax
YouTube: sarstax
