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Corporate Income Tax (CIT)

Corporate Income Tax (CIT)

What is Corporate Income Tax?

From the SARS website (articles combined and lightly edited for accuracy, clarity, emphasis and spelling):

“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 that 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 are liable for CIT?

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
  • Co-operatives
  • Collective Investment Schemes
  • Small Business Corporation (s12E)
  • Body Corporates
  • Share Block Companies
  • Dormant Companies
  • Public Benefit Companies.
How do I register?

You must make sure your business details are up to date before you submit your ITR14. So visit our keeping my business details up to date webpage to find out how to do this.

What returns should be submitted?

  • Submit annual tax return
    • For the year of assessment, the filing requirements are as follows:
      • Every company or other juristic person, which is a resident that:-
        • derived gross income of more than R1 000
        • held assets with a cost of more than R1 000 or had liabilities of more than R1 000 at any time during the 2018 year of assessment
        • derived any capital gain or capital loss of more than R1 000 from the disposal of an asset to which the Eight Schedule of the Income Tax Act applies, or
        • had taxable income, an assessed loss or an assessed capital loss must submit a return.

Returns can be submitted electronically via e-filing or manually at a SARS branch

  • Submit provisional tax returns
    • In addition to annual returns, every company is required to submit provisional tax returns:
      • The first of these returns are required to be submitted six months from the start of the year,
      • the second at year-end, and must contain an estimate of the total taxable income earned or to be earned for that period. The payment of the tax must accompany the return.
      • A third “top-up” payment may be made six months after year-end.

When submitting your return you will need to give the SIC code for your business. To find out your relevant code please click here.

When should CIT be paid?

Provisional Tax

  • 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 the assessment year 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 currently payable at a rate of 27% effective 1 March 2021. The prior year rate was 28%.

How should CIT be paid?

Payments can be made using the following options:

  • Online Banking
  • Electronic funds transfer
  • Bank payments
  • eFiling
  • Swift payment method (applicable only to foreign payments).”

Every business in South Africa is liable to pay corporate income tax and required to submit provisional and annual corporate income tax returns and make payments in two or three tranches.

The current tax rate is 28% (but small businesses with a taxable income of less than R550 000-00 per annum pay a reduced rate according to a sliding tax scale).

We have years of experience submitting corporate income tax returns (in an ever-changing environment with an increased focus on tax compliance and revenue collection) and resolving tax queries with SARS. 

Contact Onestop Accounting if you require any assistance in submitting your corporate income tax returns and avoid unnecessary administrative penalties and interest payments.

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