SARS is at war – but taxpayers have a way to fight back

 ·15 Mar 2024

The South African Revenue Service (SARS) is engaging in an all-out war against non-compliance, but taxpayers on the right side of the law still have the ability to shut overly aggressive action down.

According to experts at Tax Consulting SA, the complexities of South Africa’s tax laws often leave taxpayers uncertain over their rights – and many are often left having to pay upfront before even arguing their case with the revenue service.

Recent High Court judgements in the Western Cape and Gauteng have made it clear that taxpayers caught on the wrong side of SARS’ fight against non-compliance are often left with nowhere to hide and little room to manoeuvre when the taxman comes for its dues.

However, Section 164 of the Tax Administration Act (TAA) No. 28 of 2011 is potentially one of the most effective means of giving taxpayers the time they need to build their case, Tax Consulting said.

“Section 164(1) of the TAA states that, unless a senior SARS official directs otherwise in terms of section 164(3), the obligation to pay tax, and the right of SARS to receive and recover tax, will not be suspended by an objection or appeal or pending the decision of a court of law pursuant to an appeal.”

The very next provision, however – section 164(2) – seemingly offers some relief to taxpayers who are entangled in tax debt with SARS, which they intend to contest or cannot settle upfront.

“This protective mechanism acts as a legal stopper, preventing SARS from commencing with lawful recovery proceedings,” the tax group noted.

Thus, the law of Suspension of Payment must accompany other legal requests to ensure that no collection by SARS is enforced while legal proceedings are underway.

Section 164(2) of the TAA combats the commonly referred to “pay-now-argue later” principle and offers a glimmer of hope to taxpayers who cannot pay their tax liabilities upfront.

Importantly, a taxpayer is not required to have lodged an objection before making use of a Section 164(2) request for the suspension of payment.


The courts have typically shown that they are ready to uphold the taxpayer’s rights, particularly when SARS prepares to initiate recovery proceedings for a tax debt that is in contention.

This was the case in Petroleum Oil and Gas Corporation of South Africa (SOC) Limited v The Commissioner for SARS (21471/20) [2020], where PetroSA was successful in its application for the suspension of payment for the amount demanded, pending the outcome of the appeal.

SARS received PetroSA’s business model, which was used in the dispute in 2012, and did not raise any objections. The Court noted that SARS failed to provide any reason for the change of heart.

However, it should be noted that the rights given in Section 164 do not extend to third parties against whom claims are instituted for the recovery of the primary taxpayer’s tax debt.

Section 179(1) of the TAA states that a senior SARS official can issue a notice to a person who currently or will hold or owe money for or to a taxpayer, requiring the person to pay SARS the money to satisfy the taxpayer’s debt.

This was the case in the matter of Diroshini Pather v The Commissioner for the South African Revenue Service (52782/21) [2024], where the Gauteng High Court dismissed the applicant’s claim that she had the right to submit a request for Suspension of Payment.

The Court said that the applicant was not the primary taxpayer but rather a third party whose liability stems from a third-party appointment.

Read: More electricity price pain coming for South Africa

Show comments
Subscribe to our daily newsletter