CC: A fee too far
From 1 September 2008 all Close Corporations (CCs) will have to submit an annual return to the Companies and Intellectual Property Registration Office (CIPRO). But that’s not where it ends.
According to CIPRO the new process is necessary to determine whether registered entities are still in operation, and to confirm that the information held by CIPRO is accurate. CIPRO chief executive Keith Sendwe says: “It is vital to provide CCs with as much support as possible, helping them to remain within the boundaries of the law while achieving the financial success they need in order to survive amidst fierce competition and fluctuating market conditions. The registration [by submission of annual returns] of CCs is just one more way in which CIPRO will be able to lend much needed support.”
And that’s not all!
For the privilege of submitting this return your company will also have to pay a turnover-based fee: R100 for CCs with an annual turnover of less than R50m and R4 000 for a turnover in excess thereof. Failure to do so will result in a R150 penalty with the ultimate censure of a forced deregistration if returns are more than six months late.
Legal and above board
Before you get up in arms about the new procedure and fee we should point out that the decision is totally above board. CIPRO’s right to demand an annual return is enshrined in the Close Corporation Act. They’ve got a legal right to print money. At 31 August 2008 the organisation shows 1 797 869 active CCs on their books. If we assume that 1% of these organisations generate more than R50m turnover per annum, and that 10% of these organisations decide to deregister, then CIPRO will collecting approximately R230m per annum in annual result lodgement fees!
Reactions
What do FAnews readers think about these developments? We first broke the news of the CIPRO annual return requirement through our daily FAnews Online newsletter. At the time we asked readers whether CIPRO’s decision to levy a fee for the annual result submission was merely a money spinner. As usual some strong opinions emerged.
The requirement is “a money-making racket to increase the income earned by inefficient departments,” said one disgruntled reader. “What CIPRO fails to realise is that it is just one more thing that makes it unattractive to do business in South Africa – in the same boat as all the levies, registration fees, surcharges and additional taxes we have to endure before we can do business.”
Online convenience?
CIPRO’s online annual return submission platform appears to be difficult to use and South Africa is faced with yet another legislative requirement that’s extremely frustrating to comply with.
Other readers were more concerned about the implementation of the system. “I’ve been trying for more than six hours to submit the annual return. If CIPRO wants money then they should at least ensure that their systems work properly!”
One reader pleads: “Is there a user manual available, preferably with screen dumps, that explains how to submit this return? We need something like a registering for ‘dummies’ for those who are not computer literate.”
Government organisations have to learn to keep things simple. Updating CCs details could have been resolved by a simple post, telephone or email campaign. Yet, we have no choice but to comply and pay the fees.
Be sure you keep an eye on your FAnews Online newsletter for further developments in this regard!
