South African Tax: SARS and Dormant Companies

DORMANT COMPANIES: Tax penalty landmine

Effective from 1 December 2022, SARS will be leveraging off of the Section in the Tax Act that states that all companies, regardless of whether they are trading or not, are required to submit tax returns to SARS.

The returns that are required to be be submitted are the annual income tax returns and the bi-annual provisional tax returns. Nil returns are permissible, the emphasis is on the compliance status of a company’s tax return submission status. Returns not submitted result in non compliance and this will result in penalties being levied.

The penalties appear to be deceptively small, but they do accumulate and aggregate and that is really where the danger lies. Penalties start at R250.00 up to R16 000.00 per month that a tax return is outstanding.

If you have a dormant company and you have not been submitting your tax returns, you need to appoint a registered representative or public officer of the company, gain access to Efiling and submit the outstanding returns as soon as possible.

If you require assistance with this, we’re able to do the grunt work for you!

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