South African Firms Forced To Justify Tax Estimates

by Amanda Banks, Tax-News.com, London

04 December 2001

The South African Revenue Services (SARS) has issued a new practice note on provisional tax estimates forcing companies to justify their estimates of income.

Previously companies were allowed to make a nil provisional tax payment on the basis that that they did not have a historical starting point. Now, SARS has decreed that taxpayers are obliged to 'submit an estimate of the total taxable income that will be derived in a particular year of assessment.'

The practice note, effective immediately, allows the commissioner to call upon a taxpayer 'to justify the estimate, or to furnish particulars of their income and expenditures or any other particulars that may be required for the year of assessment in respect of which the provisional tax payment is being made.'

The commissioner, if not satisfied with the estimate, may raise it to an amount that he considers reasonable and interest will be charged as well as a 10 per cent penalty if the additional provisional tax is not settled within 14 days.

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