SARS is not messing around – with jail time and fines coming fast

South Africans not complying with the nation’s tax laws face serious prison time.

In a recent case before the Johannesburg High Court, a VAT fraud syndicate was sentenced to a cumulative 205-year prison term.

The individual sentences ranged from 5 to 65 years, with fraudulent VAT claims from SARS estimated at over R200 million.

Tax Consulting SA said that criminal convictions from SARS have been plentiful over the past few years as a result of lifestyle audits, fraudulent return submissions, and anything else deemed a “serious tax offence”.

The Tax Administration Act, 28 of 2011 defines a “serious tax offence” as the following:

“Serious tax offence means a tax offence for which a person may be liable on conviction to imprisonment for a period exceeding two years without the option of a fine or to a fine exceeding the equivalent amount of a fine under the Adjustment of Fines Act, 1991 (Act 101 of 1991).”

In practice, a “tax offence” can take the form of any contravention of a tax act, and including the criminal offences specifically listed and in relation to taxpayer non-compliance,” said Tax Consulting SA

“This may come across as quite broad, and perhaps that is the intention as taxpayers may face fines or even imprisonment for a wide range of contraventions.”

This includes:

• Submission or issuance of false documentation/certification;

• Obstruction of a SARS Official in carrying out their duties;

• Failing to notify SARS of a change in registered details; and

• Failing to submit a tax return or retain sufficient records.

Although strong statements on non-compliance are more public than ever before, criminal protection has long been on the cards for the revenue collector.

“For context, the NPA took its seat at SARS’ round table back in 2003, by virtue of a Memorandum of Understanding (MOU). The MOU was further updated in 2019, after which the barrage of criminal cases involving tax evasive manoeuvres fell into the realm of ‘public interest’,” said Tax Consulting SA.

“One key point of the MOU is the undertaking by the NPA to establish a Specialist Tax Component, whose role would be the prosecution of serious and complex, high-level tax offences, which we have seen the SARS/NPA team making good on over the past few years.”

Since the SARS and NPA team-up, successful prosecutions have increased for individuals and companies, with punishments ranging from account-draining fines to prison sentences.

Tax Consulting SA said that SARS is now increasing its collection power through aggressive collection tactics, including salary garnishes, Sheriff callouts, and taking money directly from business and personal accounts.

SARS Commissioner Edward Kieswetter said that the organisation will do its best to make it easy and seamless for taxpayers to transact with the organisation and be compliant in their tax affairs. For the non-compliant, it hopes to make life very difficult and costly.

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