SARS to impose hefty penalties for companies that fail to submit income tax returns

8 Oct 2018

By: ProBonoMatters

As from December 2018, companies that fail to submit their income tax returns will be slapped with hefty penalties, ranging from R250 to R16 000 per month.

That’s a warning issued by the South African Revenue Service (SARS) in an email message sent to tax payers. It suggests that SARS is tightening the screws on non-compliant companies as it scrambles to plug a revenue whole.

The message says “SARS will be imposing administrative penalties from December 2018 for outstanding Corporate Income Tax (CIT) returns.”

The message added that “Administrative penalties will be imposed on companies that receive a final demand to submit a return.” This will be done in accordance to Section 210 of the Tax Administration Act. It states that non-compliance with regards to non-submission of required CIT returns may be subjected to a penalty.”

The section reads thus:

(1) If SARS is satisfied that noncompliance by a person referred to in subsection (2) exists, excluding the non-compliance referred to in section 213, SARS must impose the appropriate ‘penalty’ in accordance with the Table in section 211.
(2) Non-compliance is failure to comply with an obligation that is imposed by or under a tax Act and is listed in a public notice issued by the Commissioner, other than:
      (a) the failure to pay tax subject to a percentage based penalty under Part C; or
      (b) non-compliance subject to an understatement penalty under Chapter 16. 

The SARS statement noted that “The penalties range from R250 to R16 000 per month that non-compliance continues, depending on a company’s assessed loss or taxable income.”

The statement also noted tax payers must be cognisance of the fact that it is compulsory for registered companies to submit their income tax returns. This also applies to dormant companies.

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