Regulatory Update

2018 Tax Season Shortened by Three Weeks

South Africa’s 2018 tax season has been shortened by three weeks for non-provisional taxpayers. SARS says this is to allow more time for SARS, taxpayers and the tax fraternity to deal with return verifications before most taxpayers go on the December holiday break. SARS says it has also taken steps towards making tax compliance a simple and routine experience for the taxpayer.
 
Please take note of the following dates in line with a shorter filing season:

  • Tax Season 2018 will be shortened by three weeks, running from 1 July to 31 October 2018.
  • This impacts all individual non-provisional taxpayers.
  • The deadline also applies to provisional taxpayers, who opt to file at a branch.  
  • Provisional taxpayers, who use eFiling, have until 31 January 2019 to file.
  • The deadline for manual submissions (via post or drop boxes at SARS branches) is 21 September.

The 2018 Tax Season for individuals opened on 1 July 2018 for eFilers, with its branches already open to assist from 2 July 2018.
 
For more information and a comprehensive SARS media statement, go to:
http://www.sars.gov.za/Media/MediaReleases/Pages/4-June-2018---Tax-Season-2018.aspx

Getting Up to Speed with The VAT Increase

The VAT rate has been increased from 14% to 15% as from 1 April 2018. SARS teams have been working on changes to systems which are used to receive VAT declarations made by vendors, as well as calculating any VAT refunds or VAT due to SARS. Changes to the VAT201 form have been made to reflect the increase in the VAT rate.
 
Vendors who use SARS eFiling to submit their VAT returns and have saved returns that span periods before and after 1 April 2018, will notice that those saved returns have been removed, as they contain incorrect VAT rates. Vendors must request a new VAT201 on eFiling.
 
SARS has encouraged vendors and tax consultants to visit the Value Added Tax webpage on the SARS website, where they will find a Pocket Guide and a set of Frequently Asked Questions to assist them in understanding the implications of the VAT rate increase on various types of transactions.
 
SARS has also set up a dedicated VAT-rate email address at VATRateEnquiries@sars.gov.za, if you have any questions and queries. Vendors may also contact the SARS Contact Centre on 0800 00 7277.

CIPC Wins ‘Landmark Victory’ To Impose Fines on Late Financial Statements

The Companies and Intellectual Property Commission (CIPC) has won a High Court order empowering it to fine companies who ignored compliance notices for failing to lodge annual financial statements.
 
This matter refers to three companies that were reported by their auditors to the IRBA for failure to comply with Section 30 of the Companies Act of South Africa. Section 30.1 requires a company to prepare annual financial statements within six months after the end of its financial year, or such shorter period as may be appropriate to provide the required notice of an annual general meeting in terms of section 61(7).

CIPC subsequently issued compliance notices to the mentioned companies and their directors, but received no response. Court orders were then granted for administrative fines to be paid by three non-compliant companies based on Section 175 of the Companies Act. Section 175 states that a court may impose an administrative fine only for failure to comply with a compliance notice, as contemplated in section 171(7); and not exceeding the greater of i) ten percent of the respondent’s turnover for the period during which the company failed to comply with the compliance notice; and ii) the maximum prescribed in terms of subsection 5. In terms of subsection 5, the minister may make a regulation prescribing the maximum amount of an administrative fine, which amount must not be less tan R1,000,000.
 
The penalty granted by the court is ten percent of the company’s annual turnover. The CIPC described the outcome as ‘another landmark victory’.
 
CIPC v Citiconnect 9503/18 confirmed CIPC’s authority to issue administrative penalties for general non-compliance to the Companies Act, 2008.
 
In addition, CIPC now requires companies to institute criminal and legal action against directors who have caused financial statements to be misleading or to have falsified accounting records (CIPC v Steinhoff).
 
A further notice was released by CIPC on 3 August 2018 as a notice to all Companies and Close Corporations that filed their Annual Returns from 01 July 2018, but failed to file either their annual financial statements or the Financial Accountability Supplements, that they must comply with Section 33 of the Companies Act with immediate effect, failing which the matter can be investigated and companies issued with a compliance notice.

“Companies whom CIPC engages on matters relating to non-compliance must strive to rectify conduct that goes against the spirit of the Companies Act, which is high standards of corporate governance and high levels of transparency,” the CIPC said in a media release:
 
http://www.cipc.co.za/files/8815/2810/5809/Media_Release_Cold_Cases.pdf

Customs Requirements for South African Travellers
 
SARS has cleared up some confusion about customs requirements for travellers returning to South Africa with personal valuables. This came after a warning making the rounds that all electronic devices such as laptops, cameras, mobile phones, digital watches, etc., must be registered with the SARS desk to avoid customs giving a fine to travellers when bringing the goods back into the country. SARS clarified that personal effects are not required to be declared when leaving the country, nor upon return. 
 
Custom officers may, however, challenge the traveller to provide proof of purchase or ownership. SARS also outlined documentation you may need to provide such proof.  Duty and VAT may be charged for items bought in other countries. Penalties may also be imposed for non- or false declaration.
 
For more information, go to http://www.sars.gov.za/Media/MediaReleases/Pages/24-May-2018---Customs-requirements-for-South-African-travellers-.aspx
  
To speak to a Moore Stephens expert about any of these updates, get in touch.