SARS’ missing R489 billion

SARS is missing nearly R489 billion in undisputed tax revenue, as the revenue service struggles with the scale of unpaid taxes, and taxpayers face growing pressure as enforcement intensifies.

The most recent SARS Debt Collection Data, as of 18 December 2025, demonstrates the results of SARS’ compliance initiatives, with a total of R62.58 billion in cash collected.

This is ahead of their collection targets to achieve the projected R100 billion in cash collections from debt for the period from April 2025 to March 2026.

However, a R20 billion shortfall remains against SARS’ collection goal of R35 billion in additional revenue for 2025/26.

“Even with a strong stance on making non-compliance hard and costly, cash collections pale in comparison to the massive undisputed debt book,” said Tax Consulting SA’s Partner and Head of Strategic Engagement and Compliance, Jashwin Baijoo.

The revenue service currently has an outstanding undisputed tax revenue debt value of nearly R488.53 billion.

With value-added tax being the highest contributor to the undisputed debt book, Baijoo stressed that non-compliant businesses must be aware that the imputation of personal liability is already enshrined in South African tax laws.

This would be triggered and apply to any person who controls or is regularly involved in the management of the company’s overall financial affairs, where their negligence or fraud resulted in the company’s failure to pay its tax debts.

The tax laws do not specifically presuppose the existence of formal responsibility regarding the company’s finances, Baijoo explained.

“They instead merely require that a person exercise a degree of control over or regular involvement with its overall financial affairs,” he said.

Specifically, the ambit of Section 180 of the Tax Administration Act (TAA) also relates to those persons who exerted a form of pre-emptive or informal control over the company’s financial affairs.

This may include shareholders, directors and other persons who were factually involved in the company’s failure to pay its tax debt.

“Contravention of tax laws not only tarnishes an individual or company’s reputation but can also result in hefty financial penalties, legal repercussions, and potential incarceration,” Baijoo warned.

Criminality of non-compliance

Section 234 of the TAA outlines the acts and omissions which SARS considers criminal offences, relating to non-compliance with tax legislation.

This section further states that any person who willfully commits one of the listed acts, or willfully or negligently fails to act, may be liable, upon conviction, to a fine or imprisonment of up to two years.

“This is only the tip of the iceberg, however, as Section 235 of the TAA goes even further, speaking to tax evasion and obtaining undue refunds through fraud or theft,” Baijoo said. “This comes with a five-year potential imprisonment.”

“Therefore, the ultimate burden lies with the taxpayer to discharge, when a tax debt is owed, including why they should be eligible to request the much-needed financial reprieve from SARS, and keep their heads above water.”

Fortunately, Baijoo explained that there are various tax relief measures which SARS has made available to assist these drowning taxpayers.

He urged taxpayers navigating their SARS tax debt to start by ensuring their chosen representative provides them with legal professional privilege on all sensitive information shared.

“Where the tax debt owed is in the millions, SARS are often aggressive in collections, and having an attorney with trial advocacy experience under their belt gives you an undisputed edge in negotiating on the legal papers submitted,” he said.

“Beyond this, where the correct legal course of action per the TAA is followed, you will not be subjected to funds withdrawn from your bank account without your consent.”

While the taxpayer may be legally protected, Baijoo added that a tax attorney is best complemented by an astute accountant or tax returns specialist.

This is because these professionals are familiar with the intricacies of compliant legal disclosure, while also mitigating financial harm.

A way out for taxpayers

Baijoo urged taxpayers to take note of the tax debt relief measures as outlined in the TAA, particularly where they do not have legal grounds to pursue an objection but are experiencing difficulty in settling their tax debt.

“In such cases, a Compromise of Tax Debt application is always available to the taxpayer,” he said. “The Compromise is aimed at aiding taxpayers to reduce their tax liability by means of a Compromise Agreement, which is entered into with SARS.”

Where SARS is approached correctly, and the taxpayer’s financial circumstances warrant it, Baijoo explained that a tax debt can be reduced, and the balance paid off in terms of the Compromise.

“In the end, total tax compliance is the ultimate goal, be it through the rectification of an error by SARS or securing a settlement which is more affordable to the taxpayer in a given instance,” he said.

“It is easy to be unaware of the full financial risk faced when dealing with SARS, but it is important that taxpayers have cognisance and understanding when it comes to a tax debt.”

This entails understanding what the tax debt means, how it arises, and how taxpayers can resolve their issues with SARS before the situation arises.

“Additionally, section 256(3) of the TAA enables taxpayers who have successfully concluded either a Deferral of Payment or Compromise of Tax Debt agreement to apply for a tax compliance pin, despite their tax debt,” he said.

“Law-abiding taxpayers who seek to address their tax debts are able to remedy their non-compliance and save their businesses by playing open cards with SARS.”