Time to comply or face consequence - Appoint a public officer

The South African Revenue Service (SARS) is moving forward on pursing the enforcement of public officers for companies operating in South Africa. The reforms are part of a wide-ranging initiative to obtain compliance and streamline the management of tax issues for business.

Under Section 246 of the Income Tax Act No. 58 of 1962 and the Tax Administration Act 2011, every trust, company, and other legal entity engaged in business in South Africa must have a public officer. For SARS purposes, the public officer acts as a point of contact for the company
on all tax matters.

Who can be appointed as a public officer? 

To be eligible to be nominated as a public officer the following requirements must be met:

Where the company fails to appoint a public officer, SARS has the authority to designate a person to fulfil the role.

Key roles and responsibilities of a public officer

The public officer’s roles and responsibilities include:

Representation of the Company: Being the main contact point for SARS on behalf of the company for all tax-related issues.

Communication with SARS: Responsible for liaising with SARS and submitting requested documentation regarding tax assessments, notices, audits and queries.

Tax compliance: Ensuring the company adheres to all tax regulations, including filing accurate Income tax returns, VATvat returns, PAYE, provisional tax returns, etc. This also includes ensuring PAYE, UIF, and SDL deductions are made and timeously paid over to SARS to avoid penalties.

Maintaining records: Ensuring the company maintains accurate financial records in accordance with SARS requirements.

Advisory role: Providing guidance on tax-related matters to senior management and assisting in making informed decisions regarding tax strategies.

Risk management: Playing a crucial role in managing tax liability risks by ensuring compliance with relevant laws.

Public officer personal liability for the company’s tax debt

The company itself remains liable for its tax obligations. However in instances of negligence, tax evasion or failure to perform duties, SARS can hold the public officer personally responsible for the unpaid tax. Where the public officer wilfully facilitated the company in tax evasion or neglected to submit tax returns, SARS can impose personal liability through the Tax Administration Act. SARS can bring action against Directors or Senior Officers when tax non-compliance results from wilful misconduct.

Consequences of non-compliance

Should the public officer fail to execute their duties, the company and the individual may face:

Where there is a public officer change, the company will be obligated to inform SARS within 14 days of the change having occurred. Failure to notify can result in substantial penalties.

In summary, the role of the public officer is a significant one to maintain compliance with SARS regulations. Although the company remains responsible for paying its taxes, the public officer will also be personally liable in case the officer is guilty of tax fraud, negligence or evasion. As the representative person, the public officer is legally bound to provide compliance, record-keeping, and advising on tax matters. This benefits the company's financial integrity, risk management and strategic planning. Firms should thus carefully appoint a qualified and responsible individual to this position.


References:

Reetesh Balgobind | Head : Finance