South Africa accounting and tax considerations
Since 2003, Healy Consultants Group PLC assists our Clients with timely compliance of their annual legal, accounting and tax obligations in South Africa.
Corporate Income Tax
- A South African resident company is subject to corporate income tax of a flat 28% on its worldwide income, irrespective of the source of income.
- Non-residents are taxable on South Africa-sourced income, also at a flat rate of 28%.
- Small business corporations with only natural persons as members/owners, and with gross income of not more than 20 million South African rand (ZAR), are taxed at the following rates:
- 0% on the first ZAR83,100 of taxable income.
- 7% on taxable income above ZAR83,100 but not exceeding ZAR365,000.
- 21% on taxable income above ZAR365,000 but not exceeding ZAR550,000.
- 28% on taxable income exceeding ZAR550,000.
- Companies with a turnover of less than ZAR1 million per year can elect to pay alternative turnover-based tax instead of normal CIT, at a rate ranging from 0% to 3%, depending on the level of turnover.
Withholding taxes/capital gains tax
- There are no withholding taxes on royalties or interest payments for South Africa residents.
- Resident companies are exempt from dividend withholding taxes while making payments to South Africa residents. If payments are to a non-resident, they are subject to 20% withholding tax.
- Dividends paid to a non-resident company may be tax-exempt if the receiving entity holds at least a 10% stake in the repatriating entity.
- Royalty and interest payments made to a non-resident are subject to 15% withholding tax.
- Capital gains tax for corporates is 22.4%. Capital gains imposed on a resident company from the sale of holdings in a foreign company are tax-exempt if the resident company owns at least a 10% stake in the foreign company.
- Transfers of securities are subject to 0.25% tax.
- Employers pay a 1% contribution to an employee’s social security fund.
- Companies with payroll costs exceeding US$34,500 (ZAR500,000) pay a 1% Skills Development Levy (SDL) to fund training and re-training programs.
- Employers contribute 2% of an employee’s salary to the Unemployment Insurance Fund (UIF).
Value Added Tax (VAT)
- VAT is levied at two rates: standard rate (15%) and a zero rate (0%).
- The list of zero-rated items in the Value-Added Tax Act include white bread flour, cake flour, and sanitary pads.
- A company is required to register for VAT once the value exceeds ZAR100,000 (approximately US$58,000).
- Financial services, residential accommodation and public transport are 100% VAT-exempt.
Filing due dates
- Tax year is the calendar year. However, companies are free to adopt their own fiscal year end. Annual income tax returns must be submitted within one year from the end of the company’s tax year.
- Payments are made with provisional returns filed at six-month intervals from the tax year-end based on an estimate of taxable income for the year.
- All South Africa-incorporated companies must file their corporate tax return electronically via the South African Revenue Service (SARS) portal.
- Companies with annual revenue exceeding US$2.8 million must file monthly VAT returns. All other companies must file returns every two months.
- SARS recommends a company appoint a certified auditor when filing corporation tax returns. Healy Consultants Group PLC is happy to act as your auditor in South Africa to ensure the timely, accurate filing of your corporate tax return.
Consequences of late / non-filing of tax returns
- The SARS levies a range of penalties for tax filing offences. The penalties for not submitting a tax return are set out in Chapter 15 of the Tax Administration Act. They differ according to the behaviour of the taxpayer.
- The failure by a provisional taxpayer to make payment on time will result in the imposition penalty for late payment of provisional tax calculated at 10% of the provisional tax amount not paid.
Tax reporting, accounting and auditing considerations
- Our Clients must retain all supporting documents related to a return for five years from the date of submission of the return or five years from the end of the relevant tax period.
- Financial statements must be prepared annually, according to International Financial Reporting Standards (IFRS).
- Tax debts to the state prescribe after a period of 15 years.
- Tax returns submitted that have been assessed may not be reopened after a period of three years from date of assessment by the SARS or five years if it is a self-assessment by the taxpayer, unless there has been fraud, misrepresentation, or non-disclosure by the taxpayer.
- There is no prescribed tax audit process, and an audit can be initiated by any factor as determined by the SARS.
Healy Consultants Group PLC fees for accounting and tax support
South Africa accounting & tax task US$ SARS Income tax and E-Filing registrations 750 VAT Registration 1,650 Annual tax and accounting fees (active trading company) 2,300 Annual tax and accounting fees (dormant company) 950 South Africa Public Officer services for 12 months 2,950
These accounting and tax fees are an estimate of Healy Consultants Group PLC fees to efficiently discharge your annual company accounting and tax obligations. Following receipt of a set of draft accounting numbers from your company, Healy Consultants Group PLC will more accurately advise accounting and tax fees.
Monthly bookkeeping service
Healy Consultants Group PLC will be happy to provide a monthly book-keeping service for your South African company. Typically, our Accounting & Tax Department (ATD) team will receive a Dropbox of data from our Client and will immediately thereafter timely supply our Client with i) a general ledger ii) trial balance iii) monthly and quarterly management accounts and iv) monthly and quarterly government reporting, including sales tax and payroll.
For further details of our book-keeping service and our fees, visit this page.