Frequently Asked Questions (FAQ) About Corporate Income Tax
Large or small businesses have a vital role to play as taxpayers but also as employers. To find out more about your tax obligations as a business and as an employer, our tax specialists at LM Attorneys have answered your questions about corporate tax, with some information from SARS.
What is Corporate Income Tax?
Corporate Income Tax (CIT) is a tax imposed on companies resident in the Republic of South Africa (i.e. incorporated under the laws of, or which are effectively managed in, the Republic, and which derive income from within or outside the Republic. Non-resident companies which operate through a branch or which have a permanent establishment within the Republic are subject to tax on all income from a source within the Republic.
Who is it for?
CIT is applicable (but not limited) to the following companies which are liable under the Income Tax Act, 1962 for the payment of tax on all income received by or accrued to them within a financial year:
- Listed public companies
- Unlisted public companies
- Private Companies
- Close Corporations
- Collective Investment Schemes
- Small Business Corporation (s12E)
- Body Corporates
- Share Block Companies
- Dormant Companies
- Public Benefit Companies.
What steps must I take?
Register as taxpayer
Every business liable to taxation, under the Income Tax Act, 1962, is required to register with SARS as a taxpayer. You can register once for all different tax types using the client information system.
Top Tip: You must make sure your business details are up to date before you submit. So visit keeping my business details up to date to find out how to do this.
Submit annual tax return
Every registered taxpayer is required to submit a return of income twelve months after the end of the financial year, of such taxpayer, in the prescribed form. Returns can be submitted electronically via e-filing or manually at a SARS branch where the taxpayer is registered.
Submit provisional tax returns
In addition to annual returns, every company is required to submit provisional tax returns. The first of these returns is required to be submitted six months from the start of the year, and the second at year end, and must contain an estimate of the total taxable income earned or to be earned for that period. Payment of the tax must accompany the return. A third “top-up” payment may be made six months after year-end.
When should CIT be paid?
- First payment – within six months from the beginning of the year of assessment
- Second payment – on or before the last day of the year of assessment
- Third payment – seven months after the year of assessment for taxpayers with February year-end and six months after year of assessment for all other cases.
Tax on Assessment
Payment of tax upon an assessment notice issued by SARS must be done within the period specified in such notice.
Corporate Income Tax is payable at a rate of 28%.
How should CIT be paid?
Payments can be made using the following options:
- Online Banking
- Electronic funds transfer
- Bank payments
- Swift payment method (applicable only to foreign payments).
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