Must my dormant company submit returns?
It is a very common misunderstanding that a dormant company does not have to submit returns.
Quite simply, all companies must submit tax returns and CIPC returns, albeit Nils.
So what happens if they don’t?
- Your company will not be able to obtain a Tax Clearance if there are any provisional or annual tax returns outstanding. But if it’s dormant, then this is not likely to bother you.
- SARS is hitting dormant companies with a penalty of R250 per return, each month that the return is outstanding. This will not bother you until you start trading, then you’re in big trouble, because, by then, the penalties can have grown to several thousand Rands. If the company never trades, then the penalties don’t matter, because SARS can only go after the company for them and it has no money to lose.
CIPC annual returns
- If there are 2 or more returns outstanding, then CIPC will put the company into “De-registration process”. Every so often CIPC hits the de-registration button, and all such companies are de-registered. This cannot be reversed if the company was not trading at the time of de-registration.