taxes

Tax 101 for Large Corporates

For Large Corporates, paying tax is a complicated process that has to be taken every financial year. The tax specialists at Lugisani Mantsha Attorneys, with information from SARS have drafted an condensed article for those who wish to understand in layman’s terms how the tax system works for large companies.

Large businesses have a vital role to play as taxpayers but also as employers. SARS offers a specialised and dedicated service to large businesses to enable them to meet their tax obligations with ease.
SARS treats a large corporates as a separate legal entity and it must be registered as a taxpayer in its own right. It has separate rights and duties from its owners. The owners of this type of business are shareholders and they don’t necessarily have to manage the company, in order to own it.

Mandate

  • To drive and promote compliance through excellent and professional service to our corporate taxpayers.
  • To promote optimal voluntary compliance at the lowest cost to SARS and the corporate taxpayer through enhanced relations.

Criteria for taxpayers to be classified as large businesses: 

During 2015, SARS implemented a new operating model, which included revising the definition of large businesses. Until a new definition is approved and adopted, the existing definition will apply:
  • All  companies which form part of a group of companies with consolidated group turnover in excess of R1 billion, except for Financial Services, Mining or Multinational companies with a group turnover in excess of R250 million.
  • Assessing whether or not taxpayers meet the criteria will be conducted every 3 years.

Developments

The Large Business Centre (LBC) commenced in 2004 offering a more customised service to large business taxpayers.  Since then this model has been reviewed and evaluated over the years in order to improve and optimise its service offerings.
During 2015 the LBC function was reviewed to eliminate duplication and improve efficiencies and effectiveness of our business practices. The LBC has since successfully transitioned to the new operation model and continues to serve large businesses under the various segments known as ‘Large Business’ (refer to ‘New Functions’).
For large businesses, SARS has established Large Business (LB) to provide a one-stop service to assist large businesses in meeting their tax obligations. Click here to visit the LB pages.

Corporate Income Tax

Corporate Income Tax is a tax implemented on businesses resident, incorporated under the law and managed in the Republic of South Africa. The rate for Corporate Income Tax is 28%.

How to Register For Income Tax

Once you, as a taxpayer, launch your business you should register with your local SARS office in order to receive an income tax reference number.

Income tax requires registration with the Companies and Intellectual Property Commission (CIPC). Once you’ve registered for income tax you can then register for Value-Added Tax (VAT) or Pay-As-You-Earn (PAYE), without going through a lengthy registration process. Registering for income taxes allows you to access eFiling.

Corporate Income Tax was recently refreshed, offering you a new Income Tax Return for Companies (ITR14), which aims to improve efficiency and compliance. To find out more about the new enhanced ITR14 and what you must do, click here.

PAYE

Employers are required to deduct employees’ tax (Pay-As-You-Earn) from the earnings of employees and pay it over to SARS on a monthly basis. A business that pays salaries, wages and other remuneration to any of its employees above the tax thresholds (R54 200 for individuals under the age of 65 and R84 200 for individuals aged 65 or older) must register with SARS for employees’ tax purposes. This is done by completing an EMP 101 form and submitting it to SARS.

Once registered, the employer will receive a monthly return (EMP 201) that must be completed and submitted together with the deducted employees’ tax within seven days of the month following the month for which the tax was deducted. Further information about the deduction of PAYE can be found in the Guide for employers in respect of employee’s tax on the SARS website.

For Large Corporates interested in a consultation from a specialist tax law firm, contact us today!

CategoryLegal Advice
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