What is Corporate Income Tax?
Corporate Income Tax (CIT), also known as a business tax, is a tax imposed on businesses incorporated under the laws of the Republic of South Africa and which derive income from within the Republic or through a branch or permanent establishment within the Republic.
We have recently launched a new dynamic ITR14 return as part of the modernisation of Corporate Income Tax aimed at improving efficiency and compliance. To find out more about the new enhanced Income Tax Return for Companies (ITR14) and what you must do, simply click here.
Who is it for?
CIT is applicable (but not limited) to the following businesses 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.
Top Tip: You must make sure your business details are up to date before you submit your ITR14. So visit SARS on 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 you registered.
- Submit provisional tax returns
In addition to annual returns, every business is required to submit provisional tax returns. These returns are required to be submitted every six months and must contain estimated figures of total revenue earned for that period and to pay over taxes in respect of the income estimated for that period.
Top Tip: 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?
- 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.
How should CIT be paid?
- Online Banking
- Electronic funds transfer
- Bank payments
- By cheque, limited to payments of R500 000 or less (all cheques to be made out to the “South African Revenue Service” and marked “not transferable”)
- Swift payment method (applicable only to foreign payments).