/ 13 July 2005

Cape chamber asks for moratorium on company fees

The Cape Regional Chamber of Commerce and Industry has asked the government for a moratorium to be placed on a new requirement that all companies submit annual returns and pay fees to the Companies and Intellectual Property Registration Office (Cipro).

The new requirements to Cipro will drain more than R600-million from the economy each year, the chamber said.

”In a letter to the Minister of Trade and Industry, Mr Mandisi Mpahhlwa, the Cape Town Regional Chamber of Commerce and Industry has pointed out that this will place an unnecessary burden on small business and has asked for a moratorium until a better and more cost-effective way can be found to keep the necessary records,” said Colin Boyes, deputy director of the chamber.

Boyes said that all businesses with a turnover of less than R10-million a year will be required to submit the return online and pay a fee of R450.

Larger companies will have to pay more, with the intention being to extend the system to include close corporations.

Boyes argued that it was ”common cause” that small businesses in South Africa are over-regulated, a fact acknowledged by President Thabo Mbeki in his State of the Nation address.

”The payment of the prescribed fees is viewed by business as nothing short of a tax. Four-hundred and fifty rand might not seem a large amount for some companies but there are hundreds of thousands of small and dormant shelf and property-owning companies and CC’s for whom R450 per annum will be a considerable amount.”

Boyes said registration statistics indicated that there were more than one million CC’s and 376 000 private companies, and if their turnovers are less than R10-million each they will have to pay R170-million a year and when the close corporations are included the amount will exceed R619-million a year.

”Why would government, via Cipro need to drain over R600-million a year out of the economy to keep a record system up to date? Surely basic statistical information for record-keeping purposes could be obtained via Sars [South African Revenue Service] with the approval of the Minister of Finance,” Boyes said.

Businesses with turnovers of less than R10-million a year should be exempt from having to pay the R450 fee.

Another problem was that companies will only be able to submit their returns electronically.

”This approach from Cipro to not receive paper documentation might suit that office, but was any thought given to the fact that for many small companies and CC’s this is impossible. [It] indicates the extent to which Cipro is out of touch with the reality of the business world,” Boyes said. – Sapa