The South African Revenue Service (SARS) is owed R190 billion by thousands of entities and individual taxpayers.
This was revealed by finance minister Enoch Godongwana, who was responding to a Q&A in Parliament on Monday (16 May). He said that SARS is pursuing several strategies to ensure that taxpayers understand their tax obligations – and where they fail to meet them, that the law is enforced.
He presented data showing that 2,516 entities in South Africa owed R170 billion in tax debt to SARS, while 440 individual taxpayers owed just under R22 billion.
Notably, just 72 people owe 68% of the total due to SARS from individual taxpayers, while around 500 entities owe 76% of all debt owed in that category.
|Range owed||Individuals||Amount owed||% of total||Average|
|R10 million to R20 million||242||R3 417 727 560||15.6%||R14 122 840|
|R20 million to R50 million||126||R3 693 222 590||16.8%||R29 311 290|
|More than R50 million||72||R14 828 653 530||67.6%||R205 953 520|
|Total||440||R21 939 603 680||100.0%||R49 862 740|
|Range owed||Entities||Amount owed||% of total||Average|
|R10 million to R20 million||1 234||R17 041 074 610||10.0%||R13 809 620|
|R20 million to R50 million||784||R24 257 828 450||14.1%||R30 941 110|
|More than R50 million||498||R129 059 638 000||75.9%||R259 155 900|
|Total||2 516||R170 358 541 050||100.0%||R67 710 070|
The reported amounts include the capital debt, interest, penalties and additional tax, Godongwana said.
The finance lead said that tax debt arises from a number of different scenarios which include the submission of returns without payment, audit assessments, etc.
“Depending on the origination of the debt, such debt can accumulate due to interest, penalties and additional taxes. Furthermore, debt could be as a result of a single assessment resulting in large amounts of debt being added into the debt book,” he said.
He said that SARS follows a prescribed debt collection process on all taxes overdue. However not all instances of enforcement – e.g. deferral of payment arrangements, third party appointments, etc. – readily lead to all debt being collected timeously, such that some debt remains in the books whilst collection steps are ongoing.
SARS legal collection steps will include issuing a final demand and appointment of third parties, civil judgments, personal liability, writ of execution, etc. which may give way to the attachment of assets.
“SARS also considers criminal proceedings against taxpayers on the basis of the tax debt owed. Each debt case would however be treated on its own merits however SARS always seek to ensure that all due debt is collected on time as far as practically possible and that the enforcement actions are applied consistently, taking into account the facts of each case,” the minister said.
SARS recently published its strategic plan for the next three years, which includes its intentions to secure revenue sources.
Over the next three years, it wants to implement a ‘revenue recovery programme’ that is aimed at raising overall revenue by 5% to 10% from what it calls ‘compliance’ activities.
- Curbing exemptions, thereby reducing the tax system’s complexity while boosting revenue by broadening the tax base.
- Developing a tax and customs system based on voluntary compliance.
- Adopting tax broadening strategies to improve the tax collections from a wider base of taxpayers.
- Increasing audit capacity, which is an effective way to encourage compliance.
- Encouraging clients to come forward on a voluntary basis to regulate their tax affairs and avoid the imposition of understatement penalties and administrative penalties.