Why do I have to submit my company’s returns if it’s not active?

“I did not do any business for the past year. Do I still need to submit?”

We get a version of this question in support every week. The honest answer surprises most people: yes. In South Africa, a company that isn’t trading — a dormant company — still has to file returns with CIPC (the companies registrar) and SARS (the tax authority) every year. The returns are just shorter, cheaper versions with zeros in them.

Here’s exactly what a dormant company still files, what it costs, what happens if you skip it — and what to do instead if you’re actually done with the company.

What counts as a dormant company?

Dormant (or inactive) simply means registered but not trading. SARS’s definition is strict: a company is dormant for a tax year only if it didn’t trade at all during that year — no income, no expenses. Trade for even part of the year and it files as an active company for that whole year.

Two things dormancy is not:

• It’s not an official status you can apply for. There is no form that makes your company dormant, and no register of dormant companies to move onto. (The UK has one; South Africa doesn’t.) You stop trading, and you mark the company as dormant on its next tax return.
• It’s not an exemption. CIPC’s own FAQ spells it out: the Companies Act makes no distinction between an active and an inactive company. Registered means obligated.

What a dormant company still files with CIPC

The annual return. Every registered company files an annual return (CoR 30.1) once a year, starting on the anniversary of its incorporation date. You have 30 business days to file before it counts as late. It isn’t a tax return — it’s how you tell CIPC the company still exists.

The CIPC fee depends on turnover. A company that earned nothing pays the lowest band: R100, or R150 if you file late. We file annual returns for R320 on top of the CIPC fee, and the fee calculator shows what any outstanding years add up to.

The beneficial ownership declaration. Since July 2024, CIPC blocks the annual return until the company’s beneficial ownership declaration — who really owns the company — is up to date. Dormant or not. CIPC charges nothing for the BO filing itself; we prepare and file it for R550 a year, together with the annual return.

What a dormant company still files with SARS

The company tax return (ITR14). Every company registered at CIPC gets an income tax number automatically, and SARS expects an ITR14 every year — due within 12 months of the company’s financial year end. For a dormant company it’s the short version of the form: you confirm the company is dormant and declare zeros. We prepare and file dormant returns for R270 per return.

One gotcha: to file anything, the company needs a registered representative — the person SARS recognises as speaking for it. Old, never-used companies often have nobody in the role, which locks you out of eFiling entirely. We can get you appointed for R550.

Two provisional tax returns (IRP6). Every company is automatically a provisional taxpayer, dormant ones included. SARS’s stated position is that both twice-yearly IRP6 returns are due even when the calculation comes to nil.

VAT and payroll returns, if the company has those numbers. A VAT or PAYE (payroll tax) number stays active until it’s cancelled. Until then, nil VAT returns (VAT201) and payroll returns (EMP201) stay due every period. If the company won’t trade again soon, deregistering those tax types — form VAT123e for VAT, EMP123 for payroll — stops that treadmill. The income tax number is different: it stays until the company itself is deregistered at CIPC.

What happens if you just ignore it all

Nothing, at first. That’s the trap. Then:

SARS penalties start, and they recur monthly. Once SARS issues a final demand and 21 business days pass, admin penalties run at R250 to R16,000 per outstanding return, per month, for up to 35 months. A dormant company sits at the bottom band — R250 — but it multiplies: three unfiled years with penalties running for a year is R9,000, for a company that earned nothing. The penalty calculator shows what your backlog would cost.

CIPC starts deregistering the company. Two missed annual returns in a row and CIPC assumes the company is defunct and begins removing it from the register — automatically, in bulk, with notice going only to the email address on its records. When final deregistration hits, the bank account is frozen and anything the company still owns is forfeited to the state.

The company goes publicly non-compliant. An unfiled company can’t get a tax compliance status (tax clearance) PIN, which blocks tenders, contracts and most funding — and its status is visible to anyone who checks the register.

What it costs to keep a dormant company alive

Less than most people fear. Per year:

Compare that with penalties that can pass R8,750 per unfiled return if you let them run. Keeping a dormant company compliant is the cheap option.

So what should I do with my dormant company?

Pick your scenario:

You might trade again one day. Keep the company, keep it compliant. File the annual return, the BO declaration and the dormant tax returns each year, and the company stays in good standing — name, registration number, tax history and B-BBEE status intact, ready the moment you need it. Weighing it up? We’ve compared keeping vs closing.

You’re done with the company for good. Deregister it properly. The CIPC application is free, and done in the right order it takes the ongoing obligations with it. Don’t just stop filing and hope — our complete deregistration guide walks every step.

CIPC is already deregistering it. If a notice arrived, or the status says “AR Deregistration”, you can still stop the process: file all the outstanding annual returns, with the BO declarations, before final deregistration. Here are the warning signs to check.

It’s already deregistered — and SARS is sending penalties. Deregistration at CIPC doesn’t close the company’s SARS profile. Here’s how to shut it down properly.

It was deregistered, but you want it back. If the company had assets or was in business when it was removed, reinstatement can revive it. We’ve compared reinstating vs starting fresh.

Not sure which one you are? Run the free company health check — it pulls the company’s CIPC status and outstanding filings into one view.

Frequently asked, quickly answered

Does a dormant company pay tax?

Not on income it doesn’t have. Income tax is a percentage of profit — no profit, no tax. The penalties are the danger: they’re charged for not filing, not for earning.

How long can a company stay dormant?

Indefinitely, as long as the filings keep going in. There’s no time limit — companies are parked for years and woken up when needed.

My company traded for two months, then stopped. Is it dormant?

Not for that year. SARS’s test is no trading at all during the year of assessment. Trade for any part of it and that year files as a normal active return.

What turnover do I put on the annual return if the company didn’t trade?

The real number: R0. That puts you in the lowest CIPC fee band — R100.

Does a dormant company need financial statements?

The Companies Act still requires annual financial statements to be prepared. With the annual return, most small companies file the simpler financial accountability supplement (FAS) instead; with a dormant tax return, attaching financials is optional.

My company has an assessed loss saved up. Does going dormant affect it?

It can. An assessed loss — past losses you can set off against future profits — generally only carries forward if the company trades during the year. If the loss matters to your plans, get advice before letting the company go quiet.

Is a dormant close corporation (CC) different?

Same story. A CC files its annual return in its anniversary month (with an extra month’s grace) and its nil tax returns like any company. The law doesn’t distinguish active from inactive close corporations either.

Whatever you decide — keep it, close it, or revive it — the one thing that’s always wrong is doing nothing. If your company is dormant, we’ll keep it compliant for about R1,240 a year: annual return, beneficial ownership and dormant tax returns, filed on time, without you thinking about it.