SARS sends taxpayers an R18 billion warning

SARS’ unexpected R18 billion mid-year revenue surplus shows the taxman’s intensified collection drive is paying off, sending a warning to taxpayers that non-compliance will lead to severe enforcement actions.

By 30 September 2025, the South African Revenue Service (SARS) achieved R924.7 billion in net revenue, exceeding initial budget projections by R18 billion.

Tax Consulting SA’s associate director and head of strategic engagement and compliance, Jashwin Baijoo, said this unexpected windfall is largely attributed to intensified compliance efforts through SARS’ Target Compliance Programme.

This programme yielded over R131 billion – a significant increase from the R122.6 billion raised in the previous year.

“Over and above the spoils of war from SARS’ Compliance Crusade, strong performance in Corporate Income Tax, PAYE, Dividend Tax, Domestic VAT, and General Fuel Levy portfolio collections bolstered these gains,” Baijoo said.

“However, this financial triumph carries implications. SARS’ increased collections stem from a strategic shift towards aggressive compliance and debt collections.”

This shows that the tax authority is more vigilant and unforgiving towards late payments and undeclared liabilities.

“Behind the numbers lies a palpable warning to taxpayers: the ‘supportive’ rhetoric signals a no-nonsense operational stance that demands immediate attention and proactive engagement,” Baijoo said.

Baijoo stressed that where a taxpayer simply cannot afford to settle their tax debt, they must approach SARS in the legally correct manner to request the appropriate debt relief from the revenue authority successfully.

“Taxpayers who find themselves in this situation, anticipating only coal in their Christmas stockings, do have solutions available to them, but none so favourable as an application for a compromise of tax debt,” Baijoo said.

“In recent times, SARS have become more amicable towards this, showing great compassion for the financially constrained taxpayer.”

Compromise of tax debt

Baijoo explained that taxpayers need to demonstrate their current financial hardship, along with an estimate of their net worth, before they can compromise their tax debt.

“However, bear in mind that prior lavish spending could be a kink in the armour SARS uses to decline the initial proposal and request quite a drastic increase in the settlement amount,” he said.

This includes the write-off of interest and penalties, which have been attributed to the capital amount owed.

“The taxpayer then offers to settle – in part or in full – the capital amount owed to SARS, either by lump sum or instalment payments. This proposal, when accepted by SARS, must be reduced to writing,” he said.

Baijoo explained that a compromise can be applied to any form of tax debt and across all tax types, including Personal or Corporate Income Tax, VAT and/or PAYE.

It also applies regardless of whether it is for an individual, trust or company. “There is relief available to all taxpayers who qualify for the compromise of tax debt,” he said.

Taxpayers who do not satisfy the requirements for a compromise but cannot afford to settle a tax debt in a lump sum payment still have the option to apply and enter into a payment arrangement with SARS.

Known as a deferral of payment, this is where the taxpayer applies to SARS, subject to certain conditions, for a payment agreement.

In this agreement, the taxpayer agrees to settle their outstanding tax debt amount in monthly instalment payments over time.

“This is an attractive option to many taxpayers,” Baijoo said. Instead of paying a large amount immediately, taxpayers can reduce their burden to smaller, manageable repayments to SARS.

“With a payment arrangement, there is no write-off of interest and penalties, and the entire amount is settled with monthly instalments.”

Risks of non-compliance

Baijoo warned that ignoring SARS’ enhanced collection drive can have devastating consequences. Non-compliance opens the door to drastic enforcement actions, including –

• Asset seizure: SARS may attach and sell movable and immovable assets to recover debts
• Sheriff enforcement: Court-appointed sheriffs can execute warrants to seize goods and enforce payment
• Credit blacklisting: Defaulting taxpayers face blacklisting, crippling access to credit and business opportunities
• Company liquidation: Businesses with unresolved tax debts risk forced liquidation to satisfy SARS claims
• Offshore asset repatriation: SARS now aggressively pursues international assets linked to illicit or unpaid taxes

“These enforcement mechanisms are daily realities for many South Africans, signifying a zero-tolerance policy for tax arrears,” Baijoo said.

SARS’ 2025 to 2028 Medium-Term Strategy involves a transformative modernisation project, Tax Administration 3.0.

The project leverages artificial intelligence, digital identities, and real-time risk profiling to identify non-compliance swiftly and accurately. This means there are fewer opportunities to evade detection or delay settlements.

“The R18 billion surplus declared by SARS is more than a financial milestone; it is a clear message that the revenue service has sharpened its focus on compliance and collections,” Baijoo said.

“Behind the guise of ‘support’ hides a potent collection strategy that prioritises fiscal sustainability, weeding out those who fail to meet their obligations.”

Fortunately, Baijoo said there is a possibility of a fresh start for taxpayers who engage in careful negotiations with SARS.

This could provide taxpayers with a fair and balanced outcome that recognises their situation and provides the breathing room necessary to regain financial stability.

“Approaching SARS correctly and legally can make all the difference, turning a seemingly insurmountable tax debt into a workable and mutually beneficial settlement for both parties,” he said.