SARS warning to taxpayers in South Africa: pay up, or face severe fines or prison

South African taxpayers are being warned to fully comply with SARS’ compliance directives or face severe penalties, which include fines, public naming and shaming, and even imprisonment.

This is according to tax experts André Daniels, Head of Tax Controversy and Dispute Resolution, and Colleen Kaufmann, Legal Manager at Tax Consulting SA.

However, other experts have cautioned SARS against the danger of “heavy-handedness” in its treatment of taxpayers as it prepares to ramp up tax collection efforts. 

According to Tax Consulting SA, the revenue service is stepping up enforcement and has the mandate and resources to pursue non-compliant individuals and businesses aggressively.

With R7.5 billion in additional medium-term funding, R4 billion earmarked for debt recovery and R3.5 billion for modernisation, SARS is entering a new phase of tax enforcement. 

The tax experts said that SARS’ two-pronged strategy of assisting compliant taxpayers while clamping down on those who defy the system is being enforced with greater urgency. 

“SARS has invested heavily in smarter systems, automation, and enhanced data analytics. These tools now enable the authority to conduct precise, data-driven audits and investigations,” they said.

“Gone are the days of random checks, SARS now targets suspected non-compliance with intent and accuracy.” 

Tax Consulting SA observed that taxpayers who have not regularised their affairs are increasingly under pressure.

The firm explained that SARS offers non-compliant taxpayers a legitimate, legislated pathway to correct compliance issues through the Voluntary Disclosure Programme (VDP).

However, this option is only available before any form of audit, investigation, or verification has begun.

“Those who used the VDP early have protected themselves from reputational harm, financial ruin, and in some cases, criminal prosecution,” said the consultancy firm.

“But those who delayed or failed to act are now facing real consequences, including civil judgments, penalties of up to 200% of the tax debt, and even prison time in severe cases.”

Concerns that SARS will be too heavy-handed

Despite the clampdown warning, Tax Consulting SA noted that SARS is willing to engage constructively with those making genuine disclosures. 

However, the legal requirements remain strict. According to the firm, taxpayers must be fully registered, have all returns up to date, and provide full and accurate disclosures. 

“Any rushed or incomplete VDP applications are likely to be rejected, and SARS has already invalidated several such applications, leaving taxpayers exposed to the penalties they wanted to avoid,” they said. 

This sharpened enforcement strategy is backed by cutting-edge systems. SARS has invested heavily in automation, data analytics, and inter-agency cooperation. 

Tax Consulting SA explained that audits are no longer random; they are targeted and data-driven. 

“Once SARS initiates an audit, the door to the VDP closes. At that point, taxpayers can no longer make a voluntary disclosure, and the consequences become far more serious.”

Tax Consulting SA added that SARS has already executed garnishee orders, applied for asset preservation, and launched criminal prosecutions. 

The burden of proof lies with the taxpayer, and failure to keep proper records or declare all income can be disastrous.

As part of its intensified effort to recover outstanding debts, SARS plans to employ an additional 1,700 debt collectors this year, in addition to the 750 it hired in 2024. However, not everyone supports this aggressive stance.

The South African Institute of Chartered Accountants (SAICA) has raised concerns that SARS may become too heavy-handed in its pursuit of revenue. 

Speaking in Parliament, SAICA’s project director for tax advocacy, Lesedi Seforo, cautioned that pressure to collect revenue could result in delayed refunds, premature garnishee orders, and action taken even when SARS’ own timeframes aren’t met.

SARS has responded to these concerns. Commissioner Kieswetter said it is “unhelpful” for SAICA or anyone to make sweeping generalisations. 

“SARS will always respond to specific incidents of unprofessional behaviour. But in the absence of anything specific, such comments undermine our hard work,” he said.

SARS spokesperson Siphithi Sibeko defended the tax authority’s actions and stressed that any fear of heavy-handedness is unfounded.

He said that SARS is acting and will always act within the law, and continues working with all stakeholders to build a better tax system.