Finance professionals and clients alike, have for years assumed the media releases focused on eradicating non-compliance in South Africa, have been nothing more than fear mongering by the South African Revenue Service (“SARS”), bolstered by media hype.
Jashwin Baijoo
Head of Strategic Engagement & Compliance
In recent times however, they have seen first hand just how wrong they were, with tax practitioners, accountants, and most notably, their clientele, facing the full force of an overhauled, and highly competent revenue authority.
This zero-tolerance approach has been most prominent over the last 2 fiscal periods, being consistently applied to any form of, willful or negligent, non-compliance, and applied indiscriminately to the average taxpayer, High Net Worth Individuals (“HNWI”), and even local celebs, with Commissioner Kieswetter boldly stating that “we strive to balance the trade-off between taxpayer service and risk management”.
This has come to the fore on numerous occasions, with Commissioner Kieswetter, proudly advocating for the organisation’s strategic objective to make compliance simple and easy for all taxpayers, who voluntarily seek such compliance.
Warmed-Up and Worked-Out
Recent events have clearly evidenced the new SARS, under the stalwart Commissioner Kieswetter, is on a mission to rid the country of corruption, one non-compliant taxpayer at a time. It almost seems as though the revenue authority was merely warming up in 2021 and 2022, with the real heat being brought in 2023. The most recent measure here is the increased scrutiny on intra-group loans and financial transactions, buffing out the revenue authorities already robust plans to ensure full compliance, nationwide.
The revenue authority’s follow through has shown that actions speak louder than words, with numerous investigations into non-compliance, spanning from HNWIs to the illicit cigarette industry, followed by convictions and sanctions being imposed on the non-compliant parties.
When it comes to non-compliance, on an individual, corporate, or even global level, SARS will be taking no prisoners, and has the full backing of the presidency, in its drive to stop tax evasion, profit shifting and other fraudulent activities related to the fiscus, with President Cyril Ramaphosa previously praising the revenue authority’s efforts in tackling tax dodgers and those benefitting from criminal proceeds.
A Level of Solution-Based Thinking
For the compliant taxpayer, SARS has evidenced their ability to provide efficient taxpayer service, however, when it comes to even a trace of non-compliance, the revenue authority has taken a firm, no-nonsense stance, with little to no lenience shown.
Taxpayers wishing to rectify historical non-compliance by means of voluntarily approaching SARS, either to disclose previously undisclosed information, or settle their outstanding debts to the revenue authority, in an attempt to ensure both current and future compliance, do have access to various solutions, from a legal standpoint.
The Compromise of Tax Debt is one such solution, and is aimed at aiding taxpayers, both individual and corporate, to reduce their tax liability by means of a Compromise Agreement (“the Agreement”), which is entered into with SARS.
The result of entering into the Agreement, is having your tax liability greatly reduced, to an amount which is affordable to the taxpayer, granting a much-needed reprieve and aiding the taxpayer on the road to recovery.
The Best Strategy to Remedying Non-Compliance
In order to protect yourself from possible jail-time, it remains the best strategy that you always ensure compliance.
Where you find yourself on the wrong side of SARS, there is a first mover advantage in seeking the appropriate tax advisory, ensuring the necessary steps are taken to protect your assets and reputation, or rectifying what could be chalked down to a simple human error. However, where things do go wrong, SARS must be engaged legally, and we generally find them utmost agreeable where a correct tax strategy is followed.
As a rule of thumb, any and all correspondence received from SARS should be immediately addressed, by a qualified tax specialist or tax attorney, which will not only serve to safeguard the taxpayer against SARS implementing collection measures, but also being specialists in their own right, the taxpayer and / or its advisor, will be protected from SARS’ hunt for blood.
The Importance Of An Exit Roadmap And Financial Strategy When Emigrating