When dealing with global payroll, one of the annual events that managers need to gain a clear understanding of is the year-end tax filing procedure in each of the countries that they operate. If the process is not well-documented in the organisation’s payroll procedures and policies, penalties can result for late filing. Letters or emails from irate employees who have not received their tax filing certificates on time are another likely upshot.
For countries in the South African Development Community (SADC), there are a number of different tax year-ends and very different procedures for filing taxes. SADC is a regional organisation consisting of 15 member countries: Angola, Botswana, the Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe.
What follows is a brief overview of tax year-end requirements in the region (See here for more information about digital tax filing procedures within SADC countries).
Year-end tax dates
While it would simplify matters if all countries in the region could agree a common year-end date, as yet this vision has not materialised - although a number do already share a common year-end nonetheless, with June and December being the most popular.
|
Country |
Tax year |
|
Angola |
1 January - 31 December |
|
Botswana |
1 July - 30 June |
|
Congo (DR) |
1 January - 31 December |
|
Lesotho |
1 April – 30 March |
|
Madagascar |
1 January - 31 December |
|
Malawi |
1 July - 30 June |
|
Mauritius |
1 July - 30 June |
|
Mozambique |
1 January - 31 December |
|
Namibia |
1 March – 28 February |
|
South Africa |
1 March - 28 February |
|
Swaziland |
1 July - 30 June |
|
Tanzania |
1 January - 31 December |
|
Zambia |
1 January – 31 December |
|
Zimbabwe |
1 January - 31 December |
As previously mentioned, filing methods and specific requirements vary greatly across the region. Some countries operate a full electronic submission system, while others still have a manual process in place. This guide focuses on countries representing each third of the calendar year to provide a sample of requirements:
South Africa (February tax year end)
Employers are required to submit a reconciliation at the end of the tax year (28/29 February) to the South African Revenue Services (SARS) by whatever date is published in the Government Gazette. The Employer Reconciliation Declaration (EMP501), Employee Tax Certificates [IRP5/ IT3(a)], and if applicable, a Tax Certificate Cancellation Declaration (EMP601) should be submitted using a SARS-developed free software package (e@syFile™ Employer).
This software enables employers to complete their reconciliation submission offline, before sending it to SARS via the eFiling system. The process is totally electronic. There are detailed documents available on the SARS website setting out file specifications. But payroll service providers and employers can also access a dedicated helpline to assist them during the filing period.
The tax filing period normally starts two calendar months after the tax year-end and remains open for one calendar month. Therefore, the 2015-2016 tax year-end filing had to be completed by 31 May 2016.
Failure to meet this deadline results in penalties being levied against employers. Because they are often substantial, meeting the deadline is critical. Once employers have successfully completed the process, Employee Tax Certificates [IRP5/IT3(a)] need to be distributed to all workers. The tax season for individuals runs from July to November every year and so employees should be sent their tax certificate by 1 July.
Lesotho (March tax year end) The Lesotho Revenue Authority (LRA) issues employers with a booklet containing pre-numbered triplicate carbon copy certificates (Form P16(b)). Information per employee has to be captured manually in this booklet. One copy is given to the employee concerned, a second is submitted to the LRA and a final copy is kept in the employer’s booklet.
This manual process presents some unique challenges, not least of which is the legibility, or lack of it, of the handwriting of the individual completing the forms. At the very least, pressure needs to be exerted during the writing process to make it possible to read all copies of the forms.
A summary schedule (16 (b)-1) is then completed listing all employees and the tax withheld in relation to them. Again, this is a manual process.
“Payroll managers must have clear procedures in place to ensure that once payroll has been processed in the final month of the relevant tax year, work begins on preparing tax submissions.”
Botswana (June tax year end)
Employers in Botswana are required to submit an annual return within 31 days of the end of the tax year (30 June) to the Botswana Unified Revenue Service (BURS). This annual return consists of three components:
• ITW10 (PAYE) – Annual Withholding tax return for PAYE – contains details about the employer as well as the totals of tax deducted and paid to the Commissioner General
• ITW10A (PAYE) – a list of all employees subject to PAYE
• ITW8 (PAYE) – copies of tax certificates that indicate the tax deducted for each employee.
Employees from whom tax has been deducted must be issued with a tax certificate by their employer within 31 days after the end of the tax year. If an employee has not received a certificate within this period, they should contact their employer and request one. If a certificate is still not made available to them within 15 days, the employee concerned should send notification of this failure to the Commissioner General to ensure that further action is taken.
These forms are issued in quadruplicate carbon copy format and have to be handwritten, generating similar challenges to those faced in Lesotho.
Mauritius (June tax year end)
Mauritius is one of a number of countries that has very recently changed its tax year-end date. The period 1 July 2015 to 30 June 2016 is the first cycle following the change from a December year-end.
The tax certificate provided to employees in Mauritius is the “Statement of Emoluments and Tax Deduction” (In terms of the Second Schedule (regulation 3 (m)) and the Fourth Schedule (regulation 22 (1) (A))). These certificates must be provided in duplicate to employees no later than the date specified by the Mauritius Revenue Authority (MRA). The declaration contained on the form must also be completed and signed by their employer.
Employers are required to complete a form known as the “Return of Employees” (ROE), which lists each employee, the employee Tax Account number (TAN) and the employee’s National Identity Card number (NID). It also includes fields for recording various payroll financial statistical data, any exempt emoluments, the Employer Declaration Form (EDF) amount and the amount of PAYE withheld.
Payroll service providers generally generate these forms via their payroll software packages in order to ensure they are based on the same format as the templates found on the MRA’s website. As a final note, ROEs can be filed electronically as long as all of the TAN numbers are contained in the submission.
“Employers are also required to submit a return in triplicate, detailing income paid to non-resident taxable persons, to the tax authorities during the months of January to March each year. This return can be submitted either in electronic format or using an approved paper-based form.”
Mozambique (December tax year end)
Employers needs to complete an annual income declaration or “DECLARAÇÃO DE RENDIMENTOS ANNUAL” form, which is normally submitted on paper containing the company letterhead. The employee submission form is an M/10 IRPS.
Income declaration forms must be provided to employees by 20 January each year. They need to include all income paid, including fringe benefits if applicable, withholdings at source and any deductions that may apply relating to the previous year. This statement has to be attached to the annual income tax return of the taxable person concerned.
The deadline to submit M/10 forms for taxpayers who have earned income for “first category” income (income from employment) lasts from 1 January to 31 March. This deadline is extended to 30 April for taxpayers who have earned income by other means than solely “first category” (dependent employment). Personal Income Tax (IRPS) is levied on total annual income in five different categories. As a result, employees must receive their certificates before these deadlines expire.
All submissions have to be made in Portuguese rather than English, the language used by all other countries referred to in this guide. Supporting documents can be submitted electronically to the authorities. Employers are also required to submit a return in triplicate, detailing income paid to nonresident taxable persons, to the tax authorities during the months of January to March each year.
This return can be submitted either in electronic format or using an approved paper-based form.
Zimbabwe (December tax year end)
The Zimbabwean Revenue Authority (ZIMRA) requires employers to issue employees with a tax certificate called a P6, although only those workers who meet certain criteria need to submit a return of income form. If staff members only receive an income from employment, have been continuously employed by the same organisation for the whole year, and have had PAYE deducted, they are not required to submit Income Tax returns and, therefore, may not require a P6.
Employers need to submit a summary document, the ITF16, to ZIMRA. ZIMRA requires columns to be displayed on the submission form in a particular order and failure to meet these standards can result in it being rejected. The ITF 16 Return must be submitted within 30 days after the end of the year being assessed, or over a longer period if approved by the Commissioner. Submissions currently take place in both manual or electronic format.
Conclusion
Each of the countries in the region has unique requirements in relation to the manner and format in which information must be submitted to the relevant revenue authorities. But the common thread throughout them all is that employers need to hit deadlines and conform to their demands. Failure to do this is likely to lead to penalties and/ or further action.
As a result, payroll managers must have clear procedures in place to ensure that once payroll has been processed in the final month of the relevant tax year, work begins on preparing tax submissions. If these submissions need to be done by hand, care must be taken to ensure each copy is legible.
Moreover, if detailed procedures setting out the various country requirements have been put in place, it will be possible to streamline the submissions process and ensure it occurs within the necessary timeframes in order to reduce the risk of non-compliance.
After graduating with a degree majoring in taxation, accounting and managerial accounts and finance, Sharon gained considerable experience in the fields of training, tax issues and financial ICT management, including mergers and acquisitions. She progressed to a position within South African Revenue Services before moving on to Anglo American Property Services, where she became group financial director with responsibility for ICT and payroll. Sharon joined Praxima Payroll Systems in 2001 and steered the company through the development of its own software. It is now 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. She was tasked with rightsizing its operations and refining the payroll processes to improve productivity. Sharon was asked to take on the COO role at Praxima Holdings in 2013 and has helped the company extend its footprint into Africa and beyond. She is a registered tax practitioner and member of CIPP and GPA.
When dealing with global payroll, one of the annual events that managers need to gain a clear understanding of is the year-end tax filing procedure in each of the countries that they operate. If the process is not well-documented in the organisation’s payroll procedures and policies, penalties can result for late filing. Letters or emails from irate employees who have not received their tax filing certificates on time are another likely upshot.
For countries in the South African Development Community (SADC), there are a number of different tax year-ends and very different procedures for filing taxes. SADC is a regional organisation consisting of 15 member countries: Angola, Botswana, the Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe.
What follows is a brief overview of tax year-end requirements in the region (See here for more information about digital tax filing procedures within SADC countries).
Year-end tax dates
While it would simplify matters if all countries in the region could agree a common year-end date, as yet this vision has not materialised - although a number do already share a common year-end nonetheless, with June and December being the most popular.
|
Country |
Tax year |
|
Angola |
1 January - 31 December |
|
Botswana |
1 July - 30 June |
|
Congo (DR) |
1 January - 31 December |
|
Lesotho |
1 April – 30 March |
|
Madagascar |
1 January - 31 December |
|
Malawi |
1 July - 30 June |
|
Mauritius |
1 July - 30 June |
|
Mozambique |
1 January - 31 December |
|
Namibia |
1 March – 28 February |
|
South Africa |
1 March - 28 February |
|
Swaziland |
1 July - 30 June |
|
Tanzania |
1 January - 31 December |
|
Zambia |
1 January – 31 December |
|
Zimbabwe |
1 January - 31 December |
As previously mentioned, filing methods and specific requirements vary greatly across the region. Some countries operate a full electronic submission system, while others still have a manual process in place. This guide focuses on countries representing each third of the calendar year to provide a sample of requirements:
South Africa (February tax year end)
Employers are required to submit a reconciliation at the end of the tax year (28/29 February) to the South African Revenue Services (SARS) by whatever date is published in the Government Gazette. The Employer Reconciliation Declaration (EMP501), Employee Tax Certificates [IRP5/ IT3(a)], and if applicable, a Tax Certificate Cancellation Declaration (EMP601) should be submitted using a SARS-developed free software package (e@syFile™ Employer).
This software enables employers to complete their reconciliation submission offline, before sending it to SARS via the eFiling system. The process is totally electronic. There are detailed documents available on the SARS website setting out file specifications. But payroll service providers and employers can also access a dedicated helpline to assist them during the filing period.
The tax filing period normally starts two calendar months after the tax year-end and remains open for one calendar month. Therefore, the 2015-2016 tax year-end filing had to be completed by 31 May 2016.
Failure to meet this deadline results in penalties being levied against employers. Because they are often substantial, meeting the deadline is critical. Once employers have successfully completed the process, Employee Tax Certificates [IRP5/IT3(a)] need to be distributed to all workers. The tax season for individuals runs from July to November every year and so employees should be sent their tax certificate by 1 July.
Lesotho (March tax year end) The Lesotho Revenue Authority (LRA) issues employers with a booklet containing pre-numbered triplicate carbon copy certificates (Form P16(b)). Information per employee has to be captured manually in this booklet. One copy is given to the employee concerned, a second is submitted to the LRA and a final copy is kept in the employer’s booklet.
This manual process presents some unique challenges, not least of which is the legibility, or lack of it, of the handwriting of the individual completing the forms. At the very least, pressure needs to be exerted during the writing process to make it possible to read all copies of the forms.
A summary schedule (16 (b)-1) is then completed listing all employees and the tax withheld in relation to them. Again, this is a manual process.
“Payroll managers must have clear procedures in place to ensure that once payroll has been processed in the final month of the relevant tax year, work begins on preparing tax submissions.”
Botswana (June tax year end)
Employers in Botswana are required to submit an annual return within 31 days of the end of the tax year (30 June) to the Botswana Unified Revenue Service (BURS). This annual return consists of three components:
• ITW10 (PAYE) – Annual Withholding tax return for PAYE – contains details about the employer as well as the totals of tax deducted and paid to the Commissioner General
• ITW10A (PAYE) – a list of all employees subject to PAYE
• ITW8 (PAYE) – copies of tax certificates that indicate the tax deducted for each employee.
Employees from whom tax has been deducted must be issued with a tax certificate by their employer within 31 days after the end of the tax year. If an employee has not received a certificate within this period, they should contact their employer and request one. If a certificate is still not made available to them within 15 days, the employee concerned should send notification of this failure to the Commissioner General to ensure that further action is taken.
These forms are issued in quadruplicate carbon copy format and have to be handwritten, generating similar challenges to those faced in Lesotho.
Mauritius (June tax year end)
Mauritius is one of a number of countries that has very recently changed its tax year-end date. The period 1 July 2015 to 30 June 2016 is the first cycle following the change from a December year-end.
The tax certificate provided to employees in Mauritius is the “Statement of Emoluments and Tax Deduction” (In terms of the Second Schedule (regulation 3 (m)) and the Fourth Schedule (regulation 22 (1) (A))). These certificates must be provided in duplicate to employees no later than the date specified by the Mauritius Revenue Authority (MRA). The declaration contained on the form must also be completed and signed by their employer.
Employers are required to complete a form known as the “Return of Employees” (ROE), which lists each employee, the employee Tax Account number (TAN) and the employee’s National Identity Card number (NID). It also includes fields for recording various payroll financial statistical data, any exempt emoluments, the Employer Declaration Form (EDF) amount and the amount of PAYE withheld.
Payroll service providers generally generate these forms via their payroll software packages in order to ensure they are based on the same format as the templates found on the MRA’s website. As a final note, ROEs can be filed electronically as long as all of the TAN numbers are contained in the submission.
“Employers are also required to submit a return in triplicate, detailing income paid to non-resident taxable persons, to the tax authorities during the months of January to March each year. This return can be submitted either in electronic format or using an approved paper-based form.”
Mozambique (December tax year end)
Employers needs to complete an annual income declaration or “DECLARAÇÃO DE RENDIMENTOS ANNUAL” form, which is normally submitted on paper containing the company letterhead. The employee submission form is an M/10 IRPS.
Income declaration forms must be provided to employees by 20 January each year. They need to include all income paid, including fringe benefits if applicable, withholdings at source and any deductions that may apply relating to the previous year. This statement has to be attached to the annual income tax return of the taxable person concerned.
The deadline to submit M/10 forms for taxpayers who have earned income for “first category” income (income from employment) lasts from 1 January to 31 March. This deadline is extended to 30 April for taxpayers who have earned income by other means than solely “first category” (dependent employment). Personal Income Tax (IRPS) is levied on total annual income in five different categories. As a result, employees must receive their certificates before these deadlines expire.
All submissions have to be made in Portuguese rather than English, the language used by all other countries referred to in this guide. Supporting documents can be submitted electronically to the authorities. Employers are also required to submit a return in triplicate, detailing income paid to nonresident taxable persons, to the tax authorities during the months of January to March each year.
This return can be submitted either in electronic format or using an approved paper-based form.
Zimbabwe (December tax year end)
The Zimbabwean Revenue Authority (ZIMRA) requires employers to issue employees with a tax certificate called a P6, although only those workers who meet certain criteria need to submit a return of income form. If staff members only receive an income from employment, have been continuously employed by the same organisation for the whole year, and have had PAYE deducted, they are not required to submit Income Tax returns and, therefore, may not require a P6.
Employers need to submit a summary document, the ITF16, to ZIMRA. ZIMRA requires columns to be displayed on the submission form in a particular order and failure to meet these standards can result in it being rejected. The ITF 16 Return must be submitted within 30 days after the end of the year being assessed, or over a longer period if approved by the Commissioner. Submissions currently take place in both manual or electronic format.
Conclusion
Each of the countries in the region has unique requirements in relation to the manner and format in which information must be submitted to the relevant revenue authorities. But the common thread throughout them all is that employers need to hit deadlines and conform to their demands. Failure to do this is likely to lead to penalties and/ or further action.
As a result, payroll managers must have clear procedures in place to ensure that once payroll has been processed in the final month of the relevant tax year, work begins on preparing tax submissions. If these submissions need to be done by hand, care must be taken to ensure each copy is legible.
Moreover, if detailed procedures setting out the various country requirements have been put in place, it will be possible to streamline the submissions process and ensure it occurs within the necessary timeframes in order to reduce the risk of non-compliance.
After graduating with a degree majoring in taxation, accounting and managerial accounts and finance, Sharon gained considerable experience in the fields of training, tax issues and financial ICT management, including mergers and acquisitions. She progressed to a position within South African Revenue Services before moving on to Anglo American Property Services, where she became group financial director with responsibility for ICT and payroll. Sharon joined Praxima Payroll Systems in 2001 and steered the company through the development of its own software. It is now 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. She was tasked with rightsizing its operations and refining the payroll processes to improve productivity. Sharon was asked to take on the COO role at Praxima Holdings in 2013 and has helped the company extend its footprint into Africa and beyond. She is a registered tax practitioner and member of CIPP and GPA.
