How do I apply for Income Tax Exemption as a PBO?

How do I apply?

• On an EI1 – Application for Exemption from Income Tax – External Form (to be completed by all organisations).
• This application form must:
  • Contain the details of three unconnected persons i.e. three people who are not related to each other. People are considered to be connected if they are close relatives to one another.
  • Contain the details of Public Officer / Public Representative or Tax Practitioner.
  • Be signed by the three unconnected persons.
• A written undertaking accompanying the EI 1. Depending on the nature of your organisation, it will be one of the following:
  • EI2 – Written Undertaking (only for public benefit organisations to ensure compliance with section 30 of the Income Tax Act));
  • EI2B – Written Undertaking (only for foreign branches to ensure compliance with section 30 of the Income Tax Act); or
  • EI 2 C – Written undertaking (only for recreational clubs to ensure compliance with section 30A of the Income Tax Act).
  • EI2A – Public Benefit Organisation Written Undertaking for professional bodies to ensure compliance with section 30B of the Income Tax Act.
  • EI 2D – Written undertaking for small businesses funding entities to ensure compliance of section 30C of the Income Tax Act.

Top tip: The EI 2, EI 2 B, or EI 2 C and EI2A must be signed by the three unconnected office bearers contained in the EI 1 application form.

Top tip: The EI 2, EI 2 B, or EI 2 C must be signed by the three unconnected office bearers contained in the EI 1 application form.

What supporting documents do I need?

• A Founding Document – which is either of the following:
  • Signed and Dated Constitution for an Association of Persons);
  • Signed copy of the Trust deed from the Master’s Office and Letter of Authority from the Master of High Court (for a Trust); or
  • Copy of the Memorandum of Incorporation and Articles of Association (for a non-profit company registered with Company Intellectual Property Commission (CIPC) and the Incorporation Certificate.
• Clear legible certified copy of a valid identity document, driving licence or passport, temporary identity document, asylum seekers certificate, permit of all three fiduciary responsible office bearers.
• Clear legible certified copy of a valid identity document, driving licence or passport, temporary identity document, asylum seekers certificate, permit of Representative / Public Officer / Tax Practitioner (if different from that of the three office bearers).
  
  Letter of appointment authorising the appointed representative to act as a Public Officer on behalf of the Organisation, or minutes of the meeting where the resolution was made that the appointed representative should act as the Public Officer of the organisation.
• Original letter from bank not older than one month confirming the account holder’s legal name; account number, account type; branch code and the date reflecting the date on which the account was opened of which should not be older than one month; or
  
  Original bank statement or ATM / Internet generated statement or ABSA eStamped statement not more than three months old that confirms the account holder’s legal name, bank name, account number, account type and branch code, where applicable, or where a new bank account was opened in the past 30 days and a bank statement cannot be produced, an original letter from the bank not older than one month on the bank letterhead with the original bank stamp reflecting the date the bank account was opened;
• Financial Statements must be submitted if the organisation has been in existence for longer than a year (and for each financial year that it has been in existence). If the organisation has been in existence for more than a year, but it has not been in operation (dormant), it must submit an affidavit with its bank statements.
• Proof of residential or physical business address.
  • For the organisation; and
  • For the Public Officer (if not already registered with SARS as a taxpayer).
  • To see which documents are acceptable as proof of residential address, see our Relevant material/supporting documents page and look at specifically ‘How to update my residential or business address section, look at specifically ‘How to update my residential or business address section’.
• Other: Copy of one of the following founding documents:
  • For a community radio station – A letter of registration issued by the Independent Communications Authority of South Africa (ICASA)
  • For an education institution – A copy of the certificate of registration issued by the relevant Education Authority (EMIS certificate)
  • For a Trade Union – A copy of certificate of registration issued by the Department of Labour.

How do I submit my application?

• All of the above should be submitted at your nearest SARS branch.  

Since the introduction of SARS’s new electronic registration system on 12 May 2014, applications can no longer be submitted via post, email or fax. 

Under exceptional circumstances e.g. if the applicant is incapacitated or lives more than 200km from their nearest SARS branch, they can ask a representative person to hand in their registration application at a SARS branch. However, that representative person will firstly need to register with SARS as a legal entity (they will need to bring their ID and power of attorney/ appointment letter to show that they are representing their client).

• If you are already registered as a Non-Profit Company (NPC) with the Companies and Intellectual Property Commission (CIPC), then you will automatically be registered with SARS for Income Tax purposes.
• Once you are registered with SARS, this does not mean that you have been approved for tax exemption. This will entail a further approval process. Also, even if exemption from income tax is granted, all PBOs must still complete an annual Income Tax Return on an IT12EI form.
• The exemption approval process takes approximately 57 working days from the day that all required information has been submitted. (Phase 1 – registration may take 21 working days. Phase 2 – evaluation for exemption process may take 36 working days)

Top tip: It is essential that all information provided in the application is correct and complete, see the checklist.

Need help?

• Call the SARS Contact Centre on 0800 00 SARS (7277)
• Call the Tax Exemption Unit (TEU) on 012 483 1700 or
• Email your query to teu@sars.gov.za.