SARS’ Edward Kieswetter fighting for missing R513 billion

SARS is intensifying enforcement, outsourcing collections, and leveraging AI to tackle a record R513 billion in unpaid taxes, aiming to protect public finances and strengthen compliance.

According to Hobbs Sinclair Advisory tax attorney Geo Killan, the size and growth of this debt underscore the pressing need for both stronger enforcement and taxpayer cooperation.

“A tax debt of this magnitude is not just a number on a balance sheet – it’s a direct threat to public finances and the delivery of essential services,” Kilian said. “When over half a trillion rand is outstanding, SARS has no choice but to act decisively.”

The debt, disclosed by SARS Deputy Commissioner Johnstone Makhubu at the 12th Annual Tax Indaba in Johannesburg, has grown sharply from around R415 billion last year.

The primary culprits are VAT and PAYE – “trust monies” collected by businesses and employers on SARS’s behalf – along with interest and penalties that can escalate significantly in cases of suspected fraud.

“VAT and PAYE are not optional extras,” Kilian stressed. “These are amounts collected in trust. When they are withheld or misappropriated, it crosses into a very serious compliance breach that SARS will pursue aggressively.”

SARS’s multi-pronged plan blends traditional methods with new approaches. Portions of complex and aged debts are being outsourced to around 15 external collection agencies, while internal teams focus on high-impact recoveries.

Legal action is also being intensified, moving from third-party appointments to civil judgments, writs of execution, and, where necessary, personal liability claims against directors.

“We’re seeing a definite shift in tone,” Kilian said. “SARS is moving away from leniency towards a far more assertive posture. If you’re deliberately avoiding your obligations, expect to face judgments, asset seizures, and personal liability.”

Penalties of up to 200% may be imposed in cases of intentional tax evasion, along with interest accruing from the first point of non-compliance and not just from when the issue was discovered.

Relief available for taxpayers

While SARS may be ramping up its collection efforts, the taxman still offers relief options for taxpayers in genuine distress. This includes compromises under Section 200 of the Tax Administration Act and structured deferrals.

This is where a taxpayer, who cannot afford to settle the entire amount, approaches SARS and asks for a write-off of interest and penalties attributed to the capital amount owed.

The taxpayer offers to settle, in part or in full, the capital amount owed to SARS, either by lump sum or instalment payments. When accepted by SARS, this proposal must be reduced to writing.

“The door is open for those acting in good faith,” Kilian explained. “If you can demonstrate hardship, there are legal mechanisms to restructure or reduce your debt. But you have to engage; ignoring the problem will only make it worse.”

Some debts, such as those from liquidated companies, fraudulent entities, or deceased individuals, are ultimately unrecoverable. However, SARS is cautious about excessive write-offs.

“There’s a fine balance. Write off too much, and you risk encouraging default as a strategic choice. That’s why SARS is exhausting legal remedies first, even in hard-to-collect cases,” Killian said.

SARS is also betting on technology to curb future debt accumulation. AI and data analytics investments allow SARS to cross-reference filings and bank data in real time, identifying discrepancies without prior notice.

New VAT rules for low-value e-commerce imports will also ensure that digital and cross-border transactions contribute their fair share.

“SARS is no longer just a reactive collector,” Kilian said. “With AI-driven insights, it’s moving towards proactive detection. That’s a game-changer for compliance.”

While recovering even part of the R513 billion would significantly strengthen the fiscus, challenges remain. These range from economic pressures and “Stalingrad” litigation tactics to administrative delays.

“Compliance is ultimately a partnership between the state and taxpayers. SARS can enforce and innovate, but long-term stability depends on a culture of voluntary compliance. That’s the real prize,” he said.