It is almost time for the annual provisional tax returns of companies (with yearend 28 February) and individuals to be filed. Accordingly, there are a few essentials that need to be borne in mind when doing these provisional tax filings.
Provisional tax is effectively a mechanism for Government to regulate the collection of taxes on a bi-annual basis. It requires taxpayers to estimate their projected income for the year of assessment and to make payment of the corresponding tax liability.
Government ensures that taxpayers estimate their tax liabilities accurately and pay the relevant amounts efficiently by imposing penalties where persons have underestimated their taxable income or affected a late payment of their provisional tax liability.
That notwithstanding, taxpayers are sometimes faced with difficulties as (i) it is difficult to estimate income for the year of assessment accurately or (ii) certain matters outside of their control creep in, which means that the payment of the provisional tax is not affected by the appropriate time. If this were to be the case, there are certain mechanisms available to taxpayers to ensure that the penalty is remitted, which typically require taxpayers to indicate that the default (being either the underestimation or the late payment) did not result as a result of unreasonableness on the part of the taxpayer.
Taxpayers should therefore take all reasonable steps to ensure that their provisional tax returns are filed and payment is made before the due date.