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Tax attorney explains SARS' new strategy to tackle tax evasion
- 07 August 2018
- Tax Administration
- Darren Britz
Important:
This article is based on tax law for the tax year ending 28 February 2019.
Author: Darren Britz
Tax evasion has naturally always been a criminal offense in South Africa, the only difference now is that South African Revenue Services (SARS) has begun a public campaign to clamp down on serial offenders – according to Darren Britz, a Tax Attorney at Gauteng-based consultancy Tax Consulting South Africa.
Early last month, SARS began a campaign of persecuting and publicly shaming individuals who fail to file their outstanding tax returns. The national tax collecting authority convicted and sentenced ten offenders since April of this year, and subsequently released their names into the public domain.
“We must grab hold of the issue of compliance, for the good of our country,” said Mark Kingon, Acting Commissioner at SARS at the time. A statement released by SARS read, “It is a criminal offence not to submit a tax return within the prescribed time for any of the tax types a taxpayer is registered for in terms of the Tax Administration Act.”
The crackdown comes following a tax hike in the budget released in February, hikes that industry leaders at the time hailed as an absolute necessity, particularly given the lack of financial transparency in crucial sectors such as education and healthcare. The tax offenders were fined between R2,000 and R20,000, based on the degree of offence.
According to Tax Attorney Darren Britz, the imposition of fines on offenders is definitely not a new practice for SARS, but the public release of the names – which adds to the deterrent value of tax evasion – is a new strategy, and is one that is well within the legal mandate of SARS.
Britz works at Gauteng-based consulting firm Tax Consulting South Africa, which offers nearly every tax-related service that there is demand for, broadly clubbed under consulting, advice and compliance. Specific services range from accounting to remuneration structuring to legal assistance and a whole host of others.
The public shaming from SARS is what Britz describes as a scare tactic, targeted at offenders who are deliberate in their behavior when it comes to evading taxes. “We have a new type of taxpayer, guys who over the last 10 years who felt morally righteous about not paying their taxes,” he said.
“All SARS is saying is let’s make a media campaign about this and let’s prove to taxpayers if they do not comply we will prosecute them criminally. Nothing has changed in terms of the (Tax Administration) Act, they have always been able to do this.”
In general, Britz emphasises the seriousness of the offence by drawing a comparison with the international community. “In other countries around the world this is commonplace. If you do not pay your taxes you get criminally prosecuted. Depending on how bad your behaviour is, your penalty essentially goes up.”
This article first appeared on consultancy.co.za.