Most Read Contributor in South Africa, September 2016
With the coming into effect of the Tax Administration Act, 28 of
2011 ("the Tax Admin Act") on 1 October 2012, substantial
changes were introduced to the administrative provisions and powers
of the South African Revenue Service ("SARS" or the
Under the now repealed provisions of the Income Tax Act, 58 of
1962 ("Income Tax Act"), a public officer was required to
be appointed by every company that was carrying on business or
having an office in South Africa. The public officer was
required to be an individual residing in South Africa, appointed by
the company and approved by the Commissioner. In the event of
the failure by the company to appoint a public officer, the
Commissioner was empowered under section 101(4) of the Income Tax
Act to designate the managing director, director, secretary or
other officer of the company as the public officer of the
On the basis that one of the main requirements of section 101,
for a person to be appointed as the public officer, was that they
had to be an individual and resident in South Africa and since
there was no requirement that such a person had to be an employee
or director of the company, a number of foreign entities setting up
subsidiaries or external companies in South Africa appointed third
parties, such as independent bookkeepers or other agents to act as
public officers for their South African companies in compliance
with the Income Tax Act.
However, with the coming into effect of the Tax Admin Act, the
requirements applicable to appointment of public officers have
changed. One of the more notable changes found in section 246 of
the Tax Admin Act is the requirement that a public officer must be
a senior official of the company.
It should however be noted that those persons that were
appointed as public officers prior to the coming into effect of the
Tax Admin Act, and that would not qualify as such under section 246
due to the changes in the requirements for appointment, should
remain public officers as this is provided for in section 261 of
the transitional provisions of the Tax Admin Act.
Further changes are now proposed by the Taxation Administration
Laws Amendment Bill, B-2013 released on 5 July 2013 ("the
Bill"), to section 246 of the Tax Administration. The
Bill proposes to introduce an alternative to appointing a senior
official of the company as the public officer, in cases where no
senior official of the company resides in South Africa. In
particular, it is proposed that subject to the approval of SARS
"another person" may be appointed as the public
officer. Therefore, it would appear that once the provisions
of the Bill are enacted, companies would be able to appoint persons
that are not senior officials of such companies as public officers
provided that SARS approves the appointment. These changes would
result in the Tax Admin Act being very similar to the repealed
provisions of the Income Tax Act on this issue.
In addition and unlike the repealed provisions of the Income Tax
Act, the Bill proposes to amend section 246(3) of the Tax Admin Act
to remove SARS' power to designate the managing director of a
company as its public officer and to also clarify that only a
company secretary (and not any other kind of secretary that is
employed by a company) may be designated as a public officer by
SARS in the event that a company fails to appoint a public
officer. It is proposed that the changes contained in the
Bill would be deemed to have come into effect on 1 October
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guide to the subject matter. Specialist advice should be sought
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In response to information provided by FIRS, NSE has sent letters to publicly listed companies, who were purportedly identified by FIRS as non-compliant.
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