newsletter no 3 of 2015
TRANSCRIPT
No. 3 of 2015
Useful old news explained - Taxpayers’ obligations, penalties and
interest.
1. A preview of section 35(2) of the Revenue Authority Act
In this issue of our newsletter, we analyse and expand section 35(2) of the Revenue Authority Act
(Civil penalty for late submission of returns) regulations. The regulation came into effect through
Statutory Instrument 97 of 2013.
In terms of the regulation any person who fails to submit a return on the fixed date or within any
extension of that date as granted by the Commissioner-General in terms of the Income Tax Act
(Chapter 23:06), Value Added Tax Act (Chapter 23:12) and the Capital Gains Tax Act (Chapter
23:01) shall be:
Liable for a civil penalty of not more than $30 for each day a person remains in default, not
exceeding a period of 181 days.
Guilty of an offence and liable, on conviction, to a fine not exceeding level fourteen or to
imprisonment for a period not exceeding 5 years or to both such fine and such imprisonment.
The civil penalty of $30 for each day a return is not submitted, up to 181 days shall constitute a debt
due to the Authority by the person against whom it is levied, and shall at any time after it becomes
due, be recoverable in a court of competent jurisdiction by proceedings instituted in the name of the
Authority.
For the avoidance of doubt, it is declared that payment by any person of any penalty shall not relieve
such person of any criminal liability incurred through his or her failure to make a return in terms of
the Income Tax Act (Chapter 23:06), Value Added Tax Act (Chapter 23:12) and the Capital Gains
Tax Act (Chapter 23:01), nor shall the fact of any criminal liability having been imposed upon him or
her relieve him or her from any obligation to pay any penalty.
Statutory instrument 97 of 2013 provides us with the following information in tabular form:
Civil Penalty loading model for late submissions of returns
Days delayed Remission granted Penalty Chargeable
0-10 days 100% 0 (Written warning)
11-20 days 75% 25%
21-30 days 50% 50%
31-60 days 25% 75%
61-181 days 0% 100%
List of returns required
Item
No.
Form List of return
1 ITF1 Return on income: Individual from Employment
2 ITF1A Return on income: Individual from Trade
3 ITF12 Return on Income: Company
4 ITF12C Self-assessment: Individual and Company
5 ITF16 Reconciliation of payroll details (Pay As You Earn)
6 Rev5 Return for remittance of withholding taxes and presumptive taxes
7 CGT1 Return for Capital Gains Taxes
8 VAT7 Return for remittance of Value Added Taxes
2. Tax Matrix Practical Solutions
Our analysis of SI 97, from a practical point of view requires taxpayers to navigate a number of Acts
before they can know the date(s) for submission of the applicable return(s). As Tax Matrix, we are
duty bound to provide you with practical solutions and in Appendix 1, we provide you with a
comprehensive calendar showing dates of submission of various returns, payment of taxes due,
registrations and such other relevant information.
Civil penalty loading model for late submission of returns explained
The information in the table in layman’s terms means that if your return is delayed for less than 10
days no penalty will be charged though the taxpayer will receive a written warning. If your penalty is
delayed by 13 days a portion of the $30 is charged as a penalty for each day a return remains
outstanding or is not submitted. The penalty on the 13 days is cumulative from the first day of delay,
notwithstanding the fact that if a taxpayer had delayed by not more than 10 days he or she would only
have gotten a written warning. See examples below.
Examples:
1. Submission of return 6 days after the fixed date of submission. Penalty due to Authority =
$0.00 but a written warning is issued.
2. Submission of return 13 days after fixed date of submission. Penalty due to Authority = $30 x
25% x 13 days = $97.50
3. Submission of return after 181 days = $30 x 100% x 181 days = $5430
Appendix 1- Comprehensive Calendar
Form Tax Head Type of income
levied
Relevant Act Registration Tax Payment
Date
Penalty levied on
non-payment
Filing of
returns
Penalty levied on failure
to file returns
P2 P.A.Y.E
Chargeable on
employment
income
Income Tax Act Within 14 days of
becoming an
employer
Within 10 days of
the end of every
month
100% penalty on
tax due and 10%
interest per annum
on tax due
P2 not a return
but a remittance
advice.
Does not attract penalties
ITF16 P.A.Y.E Chargeable on
employment
income1
Income Tax Act Within 14 days of
becoming an
employer
Not applicable Not applicable Within 30 days
after the end of
the tax year
Up to a maximum of $30
per day, up to 181 days for
each day a return is not
submitted.
ITF1 Employees tax for
non-FDS2 employees
Chargeable on
employment
income
Income Tax Act Employer to register
within 14 days of
becoming employer
Not Applicable Not applicable Within 30 days
of date of the
Commissioner
General’s public
notice
Up to a maximum of $30
per day, up to 181 days for
each day a return is not
submitted.
ITF1A Individual Tax Chargeable on
trade and
investment
income
Income Tax Act As soon as a taxpayer
has earned trade and
investment income 3
Not applicable Not applicable Within 30 days
of date of the
Commissioner
General’s public
notice
Up to a maximum of $30
per day, up to 181 days for
each day a return is not
submitted.
ITF12 Corporate Tax Chargeable on
trade and
investment
income
Income Tax Act Within 30 days of
incorporation or
registration under any
other law
Not applicable Not applicable Within 30 days
of date of the
Commissioner
General’s
’public notice
Up to a maximum of $30
per day, up to 181 days for
each day a return is not
submitted.
ITF12B Provisional tax
Chargeable on
trade and
investment
income
Income Tax Act See details on ITF1A
and ITF12 above
25 March
25 June
25 September
20 December
10% interest per
annum on
understated QPD or
a QPD paid late4
Not a return a
remittance
advice
Does not attract penalties
ITF12C Self-assessment5 Chargeable on
income from
trade and
Income Tax Act Within 30 days of
incorporation or
registration under any
Not applicable Not applicable 30 April of the
year following
the tax year
Up to a maximum of $30
per day, up to 181 days for
each day a return is not
investment other law 3 s37A(1) submitted.
CGT1 Capital Gains Tax Chargeable on
gains from sale
of chargeable
assets
Capital Gains Tax
Act
See note no. 6 Within 30 days of
transfer of
ownership of title.
s26 CGT Act
15% of tax due plus
interest at 10% per
annum on tax due
See ITF1A and
ITF12 above7
Up to a maximum of $30
per day, up to 181 days for
each day a return is not
submitted.
VAT7 Value Added Tax Chargeable on
consumption of
goods and
services
Value Added Tax
Act
When turnover of
taxable supplies
exceeds or is likely to
exceed US$60 000 in
any period of 12
months
25th
of the month
following the end
of the tax period
100% penalty on
tax due plus 10%
interest per annum
on tax due
25th
of the
month following
the end of the
tax period
Up to a maximum of $30
per day, up to 181 days for
each day a return is not
submitted.
Notes to Comprehensive Calendar (Appendix 1)
1. Total of earnings recorded on ITF16 should agree with total staff cost or earnings reported in the
Financial Statement, otherwise, any difference might be deemed to be an understatement of PAYE or
over deduction of staff cost in the Financial Statement.
2. FDS means Final Deduction System and is in accordance with the Commissioner General’s directive
(see paragraph 20A of the 13th
Schedule of the Income Tax Act)
3. Section 42 of the Income Tax Act (Chapter 23:06) requires a company to submit its memorandum and
articles of association within 30 days of its incorporation or registration under any law. With regards to
unincorporated persons e.g. sole traders, partners, non-executive directors etc., the Act is silent on
registration date. In our view, unincorporated persons should register as soon as they receive income
which is subject to provisional tax.
4. Section 72(11) of the Income Tax Act (Chapter 23:06) refers that when the QPD is understated by not
more than 10% or through an increase in rates of tax or for any other sufficient cause, the
Commissioner has the power to waive the whole or part of the interest on the understated QPD.
5. This includes taxpayers that are registered under category C for VAT (Valued Added Tax), taxpayers
registered under the Banking Act or under the Insurance Act or such other taxpayers specified in a
notice published by the Commissioner General to be on self-assessment.
6. Registration is done concurrently with registration for the purpose of Income Tax (See registration for
ITF1A and ITF12).
7. A return should only be filed when there is a sale or disposal of the specified asset in the year of
assessment.
NB: Certificates for dormant companies, withholding taxes and presumptive taxes obligations, penalties and
interest will be discussed in detail in the next issue of our newsletter. Thus, they have not been included in
Appendix 1 of this issue.
For further information regarding this tax update, kindly contact Marvellous Tapera on + 263 (0)
772 349740 or [email protected]