Proposed Public Officer Appointment Amendment for South African Companies
Tax Consulting South Africa
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On 1 August 2024 National Treasury issued the 2024 Draft Tax Administration Laws Amendment Bill. Included in the draft Bill are proposed amendments to section 246 of the Tax Administration Act, 28 of 2011, pertaining to Public Officers.
Section 246 of the Act, in both its current and proposed forms, serves to prescribe the requirement for a South African company to appoint a Public Officer, together with the criteria which must be met by the individual to be appointed as Public Officer.
Practically, the Memorandum on the Objects of the Tax Administration Laws Amendment Bill, 2024, highlights 2 key proposals – the appointment of a Public Officer at the time of company formation, and failing which, a hierarchy of senior officials, to be utilised as the default appointment of Public Officer.
Public Officer Performance – Current Regulations
Under the current regulations, every company conducting business or having an office in the Republic must, at all times, be represented by an individual residing in the Republic. This representative, approved by SARS, must be a person who is a senior official of the company. If no senior official resides in the Republic, another suitable person, duly appointed by the company or by an agent or legal practitioner with authority, can serve as the representative for purposes of a tax act.
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This designated individual, known as the Public Officer, under the current legislation, must be appointed within one month after the company begins operations or establishes an office in the Republic.
In cases where a Public Officer is not appointed as required under this section, SARS designates a director, company secretary, or other officer of the company as the Public Officer. Where a company has not appointed a public officer, the company is subject to a tax Act as if a tax Act did not require the public officer to be appointed.
The Public Officer is responsible for ensuring the company complies with all obligations under tax laws and is subject to penalties for any defaults by the company. The company is also regarded as having performed any actions taken by the Public Officer in their representative capacity.
If SARS is of the opinion that a person is no longer suitable to represent the company as public officer SARS may withdraw its approval of such person and the company would have to appoint a new public officer.