What is a Public Benefit Organization (PBO)?

A Public Benefit Organization is a non-profit company as defined in section one (1) of the Companies Act, a Trust or an Association of persons all incorporated in the Republic of South Africa. Public Benefit Organizations incorporated outside the Republic of South Africa are recognized if they are tax exempt in that other country.

The sole purpose of the Public Benefit Organization (PBO) should be:

• All activities should have a philanthropic intent.
• The activities can not be used to promote the economic self-interest of any of the direct/indirect employees and relatives connected to the scheme.
• Is generally for the benefit and widely accessible by the general public including a sector thereof.

The conditions and requirements for an organisation to be approved as a PBO are contained in section 30 while the rules governing the preferential tax treatment of PBOs are contained in section 10(1)(cN).

FAQ

What is the abbreviation MOI?

MOI is a term that is an abbreviation of “Memorandum of Incorporation”.

What is the purpose of a MOI?

An MOI regulates the relationships and affairs of a Company by setting out the rights, obligations and responsibilities Shareholders, Directors, and Prescribed Officers.

Are there VAT implications for PBO’s?

See SARS excerpt:

"An approved PBO may be classified as a welfare organization under the VAT Act. The classification as a welfare organization includes the PBO in the VAT dispensation without having to meet the normal registration requirements. Once classified as a welfare organization under the VAT Act, the PBO will be able to claim input tax even though there was no output tax.

A separate letter confirming that the PBO qualifies as a welfare organization in terms of the VAT Act will be issued.

PBO’s that are not classified as a welfare organisation may have to register for VAT if they have taxable supplies which meets the VAT registration requirements.

For more information on VAT and PBOs please refer to the VAT414 Guide for Associations not for Gain and Welfare Organisations"

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