Picture: THE HERALD
Picture: THE HERALD

The South African Revenue Service (SARS) is cracking down on noncompliant taxpayers, “including prominent South Africans”, a move seen as a renewed bid by the receiver of revenue to claw back its credibility amid low tax morality.

SARS has vowed to pursue cases against those who fail to file returns.

This also comes in the wake of President Cyril Ramaphosa suspending commissioner Tom Moyane, citing a loss in confidence in the commissioner’s ability to lead SARS.

SARS has come under flak for the erosion of the institution, which has weighed heavily on taxpayer confidence.

It estimates that as at the end of March, active taxpayers owed the revenue service about R30m in returns.

“The significant drop in the submission of returns was one of the key indicators pointing to decreased compliance,” SARS said on Monday.

Acting commissioner Mark Kingon said earlier in April he would focus on restoring SARS’s dented credibility. “SARS has, over the past few years, experienced an unacceptable increase in nonsubmission of returns across all tax types, including PAYE [pay as you earn], VAT [value-added tax], corporate income and personal income tax,” he said.

National Treasury says this is a reflection of weak economic growth, administrative challenges within the tax agency and increased tax avoidance.

SARS failed to meet the Treasury’s revenue target for 2017-18 as tax compliance fell to record low levels.

It collected R1.216-trillion for 2017-18, R700m, or 0.06%, short of the revised estimate of R1.217-trillion announced in the February 2018 budget.

South African Institute of Tax Professionals CEO Keith Engels said: “SARS has to build back a lot of credibility.”

Engels said on Monday that SARS had been threatening to go after tax dodgers for a while and, as a last resort, this was a reasonable move.

“It’s not new. Noncompliance makes it expensive and harder to collect, so announcing this is a matter of expedience.”

PwC head of tax Kyle Mandy said only 25% of 2018’s undercollection was the result of poor economic performance, while other factors — such as perceptions of SARS — contributed to the other 75%.

SARS said it was working with the National Prosecuting Authority (NPA) and there had already been one conviction. It warned that taxpayers found guilty of noncompliance would end up with criminal records.

So far, 36 dockets had been handed to the NPA.

However, NPA spokesman Luvuyo Mfaku said he had no knowledge of a joint initiative with SARS but that the NPA was committed to prosecuting if required and had a designated tax unit.

The Tax Administration Act and the Value-Added Tax Act both state that the failure to submit tax or VAT returns is a criminal offence.

SARS spokesman Sicelo Mkosi said the agency did not have prosecutorial powers, but when it found transgressions it took them to the NPA. “It would be unheard of and disturbing if the NPA ignored cases.”

menons@businesslive.co.za

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