At the 2019 Tax Indaba, SARS commissioner Edward Kieswetter declared that non-compliant taxpayers will no longer be allowed to operate unchecked and can expect to face criminal prosecution.
At the time, some may have scoffed at the commissioner’s promise, but recent developments may force his detractors to re-evaluate the situation, says specialist firm, Tax Consulting South Africa.
“There is, however, a question on whether the current strategy is the correct one and will start getting taxpayers to regain a respectful fear for SARS; which is really the sweeping change we need,” the group said.
“Since the Tax Indaba, we have seen SARS score several victories, but SARS’ media page over past month in particular paints the picture of a revenue authority that should not be tested.”
Below it outlined some of the recent cases which show how SARS has clamped down on tax-dodging South Africans.
- 21 February 2020 – The Cape High Court sentenced two taxpayers to 16 years and 17 years direct imprisonment respectively for defrauding the tax system. SARS also opened a case against the SARS official who allegedly assisted them to have fraudulent VAT refunds authorised and paid out;
- 28 February 2020 – the Constitutional Court dismissed Gary Van der Merwe’s leave to appeal an eviction order in a 10-year legal battle with SARS, which effectively means the property can now be sold to recover Mr Van der Merwe’s outstanding tax debts. In the same media statement SARS noted that more than 80 individuals have been sentenced to imprisonment for VAT fraud;
- 1 March 2020 – the Supreme Court of Appeal dismissed Mark Lifman’s appeal to stop SARS from seizing his assets in settlement of a tax debt amounting to R352-million;
- Amidst SARS’ victory parade, the commissioner released a specific warning on 27 February 2020 that firm action awaits transgressors, encouraging taxpayers to come clean: “we want to remind taxpayers and traders to talk to SARS, before we come to talk to you.”
SARS’ overall objective is quite obvious; it wants to galvanise voluntary compliance across the tax base by making examples of delinquents, thereby striking fear into the hearts of taxpayers, Tax Consulting SA said.
“SARS’ strategy is a good one, but there is an argument to be made that it is directed at the wrong segment of the tax base. SARS is not losing out on a lot of revenue from the Mark Lifman’s of this world.
“Returning to the topic of employers not paying over PAYE, SARS is losing out on collections from the mere mortals – those taxpayers who perhaps used to be compliant, but as SARS lost its deterrence factor, they found it too easy not to pay their taxes.”
The group said that SARS should go after companies, directors and public officers who fail to pay over PAYE.
In the same vein, taxpayers who do not declare rental income or who use offshore trust structures to evade taxes must be seen to receive similar sentences to the ones SARS boasted about in the media, it said.