Taxpayers will face increased scrutiny from the South African Revenue Service (SARS) as it has effectively lowered the threshold to criminally prosecute taxpayers.
Prior to the latest tax amendment legislation becoming final, a taxpayer could only be liable for a fine or subject to imprisonment if the relevant transgression was committed “wilfully and without just cause”.
Doelie Lessing, director at Werksmans Attorneys, said that the proposed amendments were met with fierce resistance and were severely criticised by tax practitioners and civil society on the basis that the removal of the element of wilfulness would result in the erosion of the protections against the criminalisation of unintentional mistakes by taxpayers.
This is because the proposed amendments would have effectively removed SARS’ obligation to prove intention before a taxpayer could be found guilty of these non-compliance offences.
Lessing said that the final amendment legislation has not done away with intent entirely, but rather a differentiated approach has been adopted in terms of which the existing list of non-compliance offences has been split into two categories:
- Offences that require wilfulness, where the heavier burden of proof falls on SARS;
- Offences in respect of which “negligence” will suffice to trigger potential criminal liability.
Lessing outlined the different categories of offences in more detail below.
|11 offences which could give rise to criminal liability, only if the taxpayer committed them with intent|
|Submitting a false certificate or statement in relation to returns, records and reportable arrangements|
|Issuing an erroneous, incomplete or false document|
|Failure to reply to or answer truly and fully any questions put to the person by a SARS official|
|Obstructing or hindering a SARS official in the discharge of duties.|
|Refusal to give assistance during an audit or criminal investigation.|
|Holding oneself out as a SARS official|
|Dissipating assets or assisting another person to dissipate assets in order to impede the collection of tax.|
|Using any amounts deducted by way of employees’ tax for purposes other than paying it to SARS|
|Issuing documents purporting to be employees’ tax certificates if not an employer or authorised to issue|
|Declaring that the price chargeable in respect of supplies is subject to VAT, where in fact no VAT is payable or charging VAT in excess of the VAT properly leviable|
|Issuing more than one tax invoice, credit note or debit note in respect of a VAT supply|
|17 offences which could give rise to criminal liability, even if the taxpayer committed them without intent|
|Failure to register for tax or to notify SARS of a change in registered particulars|
|Failure to appoint a representative taxpayer or to notify SARS a change in representative taxpayer|
|Failure to register as a tax practitioner if required to do so.|
|Failure to submit a return or document to SARS or the failure to issue a document to a person as required under a tax Act|
|Failure to retain records as required|
|Failure to furnish information or documents requested, excluding information requested for revenue estimations.|
|Failure to give evidence when required.|
|Failure to comply with a SARS directive.|
|Failure to disclose to SARS material facts required.|
|Failure to comply with tax payments including third party payments.|
|Failure to comply with withholding tax obligations when required.|
|Failure to issue any employees’ tax certificates or to notify SARS of having ceased to be a registered employer.|
|Failure by an employer to deliver to any employee or former employee any employees’ tax certificate or notify SARS of having ceased to be a registered employer|
|Failure to submit provisional tax estimates.|
|Failure to comply with the payment of VAT on imported services and otherwise. Failure to submit VAT returns and special records.|
|Failure to include VAT in the advertised or quoted price or failure to separately indicate the VAT exclusive price and the VAT inclusive price.|
|Failure to keep sufficient records as required.|