There is developing trend where tax practitioners and taxpayers alike cry “fear-mongering” where media releases caution against non-compliance, despite numerous statements by the South African Revenue Service (“SARS”) noting a zero-tolerance approach to any form of, willful or negligent, non-compliance.

These statements are aligned with SARS Commissioner, Edward Kieswetter’s, push for the organisation’s strategic objective to make compliance simple and easy for all taxpayers, who voluntarily seek such compliance.

The revenue authority’s follow through has shown that actions speak louder than words, with numerous investigations into non-compliance, spanning from High-Net Worth Individuals to the illicit cigarette industry, followed by convictions and sanctions being imposed on the non-compliant parties.

Cleaning House

Recent events have clearly evidenced a new approach by SARS under Commissioner Kieswetter, where the institution 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 is warming up, and through its alliances, also levelling up, to a stage where it can truly deal with delinquency.

Although this is certainly what South Africa needs, Kieswetter, in a panel discussion on 03 March 2022, stated that South Africa will never have sufficient capital to do what needs to be done. He goes further, to say that “it just takes too long to do anything in South Africa”.

The sentiment of this statement comes as no surprise to the general populous, but begs the question; does this include SARS, especially in light of its recent revenue collection victory, and if so, is this the foreshadowing for what is yet to come from the revenue collector?

The Current State of Affairs

In recent developments, and in consideration of the 2022 Budget Speech, SARS’ investigative prowess, and strong follow through on prosecutions hinged on non-compliance shows a strong revenue authority.

As is expected in any compliance drive, taxpayers have had no option but to abide by the regulations, or face the wrath of a revenue authority, who, although experiencing its own internal conflicts, leaves no stone unturned in the pursuit of compliance

SARS also has an expanded reach, with a network of information agreements in place with over 100 jurisdictions across the world. It comes as no surprise that SARS has taken note when people boast about their wealth on social media platforms.

This approach has been followed across board, with SARS also easing into the crypto asset space with the newly disclosed phased approach, without too much resistance from South African investors.

The First-Mover Advantage

In order to protect yourself against run ins with SARS, 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 assistance, to ensure the necessary steps are taken to protect both yourself and your bank balance from paying the price for what could be the smallest of mistakes. However, where things do go wrong, SARS must be engaged legally, and we generally find them to be agreeable to the utmost 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 the taxpayer will also be correctly advised on the most appropriate solution to ensure their tax compliance.

For the Good

For taxpayers wishing to rectify historical non-compliance by means of a voluntary disclosure of past defaults, or ensure their current compliance record remains unblemished, there are various solutions available from a legal standpoint.

The compromise of tax debt (“the Compromise”) is one such solution, and is aimed at aiding taxpayers in financial distress, both individual and corporate, to reduce their tax liability by means of a Compromise Agreement (“the Agreement”), which is entered into with SARS.

Where SARS is approached correctly, a tax debt can be reduced, and the balance paid off in terms of the Compromise, allowing some much-needed breathing room, and helping taxpayers all over the country to become tax compliant, granted their financial circumstances warrant it.

Once the Compromise is accepted by SARS, and the agreement duly executed, with payment being made as proposed by the taxpayer, the balance of the liability due to SARS is written-off by the revenue authority.

Written by Jashwin Baijoo, Legal Manager, Africa Tax and Compliance at Tax Consulting SA