Is Southern Africa aboard the digital filing train? Is Southern Africa aboard the digital filing train?

Is Southern Africa aboard the digital filing train?
04 Jan 2018

In the UK, implementing Real Time Information (RTI) took much planning and and preparation. The change in the way employers interact with the tax authorities was a hot topic for months as a result of the scale of the project. Some employers took part in pilot projects to ensure that as many issues as possible were dealt with before they submitted payroll data electronically to HM Revenue and Customs (HMRC). So how do Southern African organisations interact with tax authorities in the region and has there been any movement towards an electronic method of submitting of information?

“SARS has also developed free software linked to e-filing, which allows employers to complete their reconciliation submission offline and then send these to SARS via e-filing”

South Africa

In South Africa, an employer is required to submit a reconciliation showing details of the total amount of Employees’ Tax (Pay-As-You-Earn or PAYE), Skills Development Levy (SDL), Unemployment Insurance Fund (UIF) and Employment Tax Incentive (ETI) deducted or withheld or due, as well as the details of Employee Tax certificates (IRP5/IT3(a) issued during the tax year.

As part of its drive for better service, the South African Revenue Service (SARS) has been modernising tax processes since 2007 and its service offering is one of the most advanced on the African continent. Once employers are registered for PAYE, that is they are registered taxpayers, they can also register to use e-filing service. This service, among other things allows them to file a return, make payments and request a tax clearance certificate.

Monthly Employer Declaration (EMP201)

The amounts deducted or withheld by employers must be paid to SARS on a monthly basis after completing a Monthly Employer Declaration (EMP201). The EMP201 is a payment declaration in which they declare the total amount of payment due which includes allocations for PAYE, SDL, UIF and ETI. A unique Payment reference number (PRN) ise pre-populated on the EMP201 and used to link the actual payment to the relevant EMP201 form payment declaration.

Employer Reconciliation Declarations (EMP501 and EMP601)

Employers are required to submit their reconciliation documents by the date published in the Government Gazette. As part of the process, an employer submits an accurate Employer Reconciliation Declaration (EMP501), Employee Tax Certificates (IRP5/IT3(a)) and if applicable, a Tax Certificate Cancellation Declaration (EMP601) for the:

• Interim period - the six month period before 1 March to 31 August
• Annual period - for the full year before 1 March to 28/29 February

The first PAYE Interim Reconciliation for a six month period took place in 2010. During each of these reconciliation periods, employers are required to submit accurate reconciliation declarations for the transaction period (either 6 months or 12 months), relating to Monthly Employer Declarations (EMP201) submitted, payments made and the Employee Income Tax Certificates IRP5/IT3(a).

An employer is required to issue an employee with an IRP5/IT3(a) where remuneration is paid or has become payable. The IRP5/IT3(a) discloses workers total employment remuneration earned for the year of assessment as well as the total deductions.

SARS has also developed free software linked to e-filing, which allows employers to complete their reconciliation submissions offline before sending thesm to SARS via e-filing. e@syFile™ Employer was designed to make it quicker, easier and more convenient to work with SARS.

Zimbabwe

While Zimbabwe has lagged behind South Africa in terms of electronic tax filing for some time, the Zimbabwe Revenue Authority (ZIMRA) launched an e-service in June 2015 after realising that most of its clients were using information technology to run their businesses. A ZIMRA online news update explained the rationale: “In response to this development, the organisation (ZIMRA) has - in conjunction with cooperating banks - introduced direct banking where clients can settle their revenue obligations within their banks instead of visiting ZIMRA Offices. ZIMRA is hopeful that the successful implementation of e-filing will reduce compliance costs for clients.”

There are simple step-by-step instruction guidelines to assist employers with the online registration form and the platform can be accessed once a password has been provided. But at this stage it is not possible to make on-line payments. Employers undertake either need to do electronic payment transfers or make payment at their bank.

The system does allow for proof of payment to be uploaded with the declaration, but it is not possible to obtain a receipt. This makes it necessary to take the submission to a local ZIMRA office so that it can be stamped to validate final proof of payment.

The aim is to resolve this rather manual situation within the next few months.

The PAYE declaration (form P2) must be submitted monthly and incorporates the Aids Levy. Prior to the launch of the electronic service, the form P2 had to be completed manually and handed in at a local ZIMRA office. The forms were then captured in a centralised system. This labourintensive process often resulted in errors in PAYE accounts and increased costs for employers due to the time taken to resolve such issues.

The major advantage of e-services for employers at this point in time is that they can see the current standing of the PAYE account, (and can access a statement of account). They can also request tax clearance certificates.

Swaziland

March 2014 was their launch date for e-Tax, Swaziland’s electronic platform, which enables taxpayers to submit their returns as well as access information and forms online. The platform is a live feed into the Swaziland Revenue Authority (SRA) Revenue Management System (RMS).

The system allows for quick and convenient filing as well as access to historical filing records. Direct access to SRA staff via the portal is a further advantage of the system. Employers no longer need to wait for SRA to send them assessments or sit in long queues at SRA offices, resulting in large time savings.

The portal will also facilitate payment and reduce penalties as a result of payments not being made on time.

To register for the service employers are required to complete a form which is available to download from www.sra.org.sz. A taxpayer identification number (TIN) and the appointed user’s National Identity number is required, along with some other information to complete the form. The completed form can then be emailed to info@sra.org.za. Once registration has been activated a username and password will be issued.

The platform enables forms to be created, saved and submitted. If the forms are saved they can be submitted at a later date.

So while South Africa is leading the surge in the electronic movement in Southern Africa its neighbours are entering the electronic age too and before long will undoubtedly be collecting more data via their respective portals. Cost savings have been the main driver behind such change, with revenue authorities transferring much of the administration to employers. The digital filing train is fuelled up and already starting out on its long journey towards the future.

 

After graduating with a degree majoring in Taxation, Accounting and Managerial Accounts and Finance, Sharon gained considerable experience in the field of training, tax issues and financial/ICT management, including mergers and acquisitions. Sharon progressed to a position within South African Revenue Services before moving on to Anglo American Property Services where she became Group Financial Director (with ICT and Payroll as part of her management portfolio). She joined Praxima Payroll Systems in 2001 and steered the company through the development of their own software and established them as a provider of payroll services to some of the largest legal practices in South Africa.
She moved to Celergo, to take up the role of Head of Operations UK. There she oversaw the right sizing of operations and refining of payroll processes to improve productivity. She was asked to take on the COO role at Praxima Holdings in 2013 and has assisted the company to extend its footprint into Africa and beyond. She is a registered Tax Practitioner, a member of CIPP and GPA.

In the UK, implementing Real Time Information (RTI) took much planning and and preparation. The change in the way employers interact with the tax authorities was a hot topic for months as a result of the scale of the project. Some employers took part in pilot projects to ensure that as many issues as possible were dealt with before they submitted payroll data electronically to HM Revenue and Customs (HMRC). So how do Southern African organisations interact with tax authorities in the region and has there been any movement towards an electronic method of submitting of information?

“SARS has also developed free software linked to e-filing, which allows employers to complete their reconciliation submission offline and then send these to SARS via e-filing”

South Africa

In South Africa, an employer is required to submit a reconciliation showing details of the total amount of Employees’ Tax (Pay-As-You-Earn or PAYE), Skills Development Levy (SDL), Unemployment Insurance Fund (UIF) and Employment Tax Incentive (ETI) deducted or withheld or due, as well as the details of Employee Tax certificates (IRP5/IT3(a) issued during the tax year.

As part of its drive for better service, the South African Revenue Service (SARS) has been modernising tax processes since 2007 and its service offering is one of the most advanced on the African continent. Once employers are registered for PAYE, that is they are registered taxpayers, they can also register to use e-filing service. This service, among other things allows them to file a return, make payments and request a tax clearance certificate.

Monthly Employer Declaration (EMP201)

The amounts deducted or withheld by employers must be paid to SARS on a monthly basis after completing a Monthly Employer Declaration (EMP201). The EMP201 is a payment declaration in which they declare the total amount of payment due which includes allocations for PAYE, SDL, UIF and ETI. A unique Payment reference number (PRN) ise pre-populated on the EMP201 and used to link the actual payment to the relevant EMP201 form payment declaration.

Employer Reconciliation Declarations (EMP501 and EMP601)

Employers are required to submit their reconciliation documents by the date published in the Government Gazette. As part of the process, an employer submits an accurate Employer Reconciliation Declaration (EMP501), Employee Tax Certificates (IRP5/IT3(a)) and if applicable, a Tax Certificate Cancellation Declaration (EMP601) for the:

• Interim period - the six month period before 1 March to 31 August
• Annual period - for the full year before 1 March to 28/29 February

The first PAYE Interim Reconciliation for a six month period took place in 2010. During each of these reconciliation periods, employers are required to submit accurate reconciliation declarations for the transaction period (either 6 months or 12 months), relating to Monthly Employer Declarations (EMP201) submitted, payments made and the Employee Income Tax Certificates IRP5/IT3(a).

An employer is required to issue an employee with an IRP5/IT3(a) where remuneration is paid or has become payable. The IRP5/IT3(a) discloses workers total employment remuneration earned for the year of assessment as well as the total deductions.

SARS has also developed free software linked to e-filing, which allows employers to complete their reconciliation submissions offline before sending thesm to SARS via e-filing. e@syFile™ Employer was designed to make it quicker, easier and more convenient to work with SARS.

Zimbabwe

While Zimbabwe has lagged behind South Africa in terms of electronic tax filing for some time, the Zimbabwe Revenue Authority (ZIMRA) launched an e-service in June 2015 after realising that most of its clients were using information technology to run their businesses. A ZIMRA online news update explained the rationale: “In response to this development, the organisation (ZIMRA) has - in conjunction with cooperating banks - introduced direct banking where clients can settle their revenue obligations within their banks instead of visiting ZIMRA Offices. ZIMRA is hopeful that the successful implementation of e-filing will reduce compliance costs for clients.”

There are simple step-by-step instruction guidelines to assist employers with the online registration form and the platform can be accessed once a password has been provided. But at this stage it is not possible to make on-line payments. Employers undertake either need to do electronic payment transfers or make payment at their bank.

The system does allow for proof of payment to be uploaded with the declaration, but it is not possible to obtain a receipt. This makes it necessary to take the submission to a local ZIMRA office so that it can be stamped to validate final proof of payment.

The aim is to resolve this rather manual situation within the next few months.

The PAYE declaration (form P2) must be submitted monthly and incorporates the Aids Levy. Prior to the launch of the electronic service, the form P2 had to be completed manually and handed in at a local ZIMRA office. The forms were then captured in a centralised system. This labourintensive process often resulted in errors in PAYE accounts and increased costs for employers due to the time taken to resolve such issues.

The major advantage of e-services for employers at this point in time is that they can see the current standing of the PAYE account, (and can access a statement of account). They can also request tax clearance certificates.

Swaziland

March 2014 was their launch date for e-Tax, Swaziland’s electronic platform, which enables taxpayers to submit their returns as well as access information and forms online. The platform is a live feed into the Swaziland Revenue Authority (SRA) Revenue Management System (RMS).

The system allows for quick and convenient filing as well as access to historical filing records. Direct access to SRA staff via the portal is a further advantage of the system. Employers no longer need to wait for SRA to send them assessments or sit in long queues at SRA offices, resulting in large time savings.

The portal will also facilitate payment and reduce penalties as a result of payments not being made on time.

To register for the service employers are required to complete a form which is available to download from www.sra.org.sz. A taxpayer identification number (TIN) and the appointed user’s National Identity number is required, along with some other information to complete the form. The completed form can then be emailed to info@sra.org.za. Once registration has been activated a username and password will be issued.

The platform enables forms to be created, saved and submitted. If the forms are saved they can be submitted at a later date.

So while South Africa is leading the surge in the electronic movement in Southern Africa its neighbours are entering the electronic age too and before long will undoubtedly be collecting more data via their respective portals. Cost savings have been the main driver behind such change, with revenue authorities transferring much of the administration to employers. The digital filing train is fuelled up and already starting out on its long journey towards the future.

 

After graduating with a degree majoring in Taxation, Accounting and Managerial Accounts and Finance, Sharon gained considerable experience in the field of training, tax issues and financial/ICT management, including mergers and acquisitions. Sharon progressed to a position within South African Revenue Services before moving on to Anglo American Property Services where she became Group Financial Director (with ICT and Payroll as part of her management portfolio). She joined Praxima Payroll Systems in 2001 and steered the company through the development of their own software and established them as a provider of payroll services to some of the largest legal practices in South Africa.
She moved to Celergo, to take up the role of Head of Operations UK. There she oversaw the right sizing of operations and refining of payroll processes to improve productivity. She was asked to take on the COO role at Praxima Holdings in 2013 and has assisted the company to extend its footprint into Africa and beyond. She is a registered Tax Practitioner, a member of CIPP and GPA.

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