SARS declares war on tax dodgers
SARS expanded its compliance arsenal in 2023, declaring war on non-compliant taxpayers.
The taxman has faced a challenging year, with SARS achieving revenue collection growth of only 2.6% due to a decline in corporate income taxes and growing VAT refunds.
SARS deputy commissioner Johnstone Makhubu said that tax collections are R22 billion below the February 2023 budget estimates for the first five months of the 2024 financial year.
With the decrease in collections, the taxman is doing everything to can to raise funds – with non-compliant taxpayers its primary target.
“Whilst you may not have kept up to your compliance obligations or current affairs, SARS certainly have. The revenue authority has made it clear that whilst they strive to make compliance easy and sometimes seamless”, the war on non-compliance is only just beginning,” Jashwin Baijoo from Tax Consulting SA.
“To defend against SARS’ strategic battle plan, the most heavy-hitting weapons must be understood, as not even local celebrities can evade SARS’ radar forever – here is what you need to know.”
New innovations to SARS’s arsenal include enlisting “collection mercenaries” as the taxman returns to the outsourcing of historic tax debts.
Indebted South Africans should not be surprised if they receive a “Notice of Intention – Handover to External Debt Collectors.”
If there is no attempt to pay, SARS will hand over the taxpayer for collection and possible prosecution.
SARS is also using rapid-fire civil Judgements
“As a South African tax resident, one of the scariest situations you can find yourself in is where you have a large tax debt owed to SARS, which you cannot afford – this often results in SARS taking Civil Judgement against you,” Baijoo said.
“You would hope and pray that the revenue authority shows you mercy, and imagine they offer to write off a portion of your tax debt; well, with the right legal team by your side, this possibility can very quickly become a reality.”
SARS also exploits the Tax Administration Act, which can allow a representative taxpayer, employer, or vendor to be held personally liable for a company’s debt.
Despite being aggressive, SARS does allow implicated individuals an opportunity to contest their personal liability via a Notice of Personal Liability.
“This is, however, not the fire escape it may sound like as proving no personal liability entails what could be construed as an admission on why the taxes were not paid and what better use the funds were put to,” Baijoo said.
SARS has also implemented the Approval of International Transfer (AIT) system with the aim of speeding up cross-border fund transfer processes.
SARS said that the new system has two strategic objectives:
- Making compliance easy and sometimes seamless for taxpayers wishing to comply and
- Making non-compliance hard and costly for taxpayers who are unwilling to comply.
Defending yourself
“In order to protect yourself from being the next casualty in the war on non-compliance, it remains the best strategy that you always ensure your tax affairs are kept in order,” Naijoo added.
“Where you find yourself on the wrong side of SARS, there is a first mover advantage in seeking the appropriate tax advisory. This ensures the necessary steps are taken, protecting yourself and your loved ones from the wrath of SARS.”
“However, where things do go wrong, SARS must be engaged legally, and we generally find them agreeable where a correct tax strategy is followed.”
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