Edward Kieswetter going after one group of taxpayers hard

The South African Revenue Service’s (SARS) ruthless pursuit of delinquent taxpayers has seen the taxman rake in R110 billion from them this year.

As of the end of September, SARS had collected R1 trillion in gross revenue in 2024, close to its goal of R1.8 trillion for the full year.

However, the Medium-Term Budget Policy Statement at the end of October revealed that tax collection for 2024/25 is expected to be R22.3 billion lower than what the Treasury estimated in February this year.

Finance Minister Enoch Godongwana said that the main budget revenue estimate has also been lowered by R31.2 billion over the next two years.

SARS’ revenue collection was hurt by several factors this year, chief among which were underperforming personal income tax collections, lower fuel levy collections, and lower import VAT collections.

However, corporate tax and domestic VAT collections are expected to exceed projections as the outlook for corporate profitability has improved amid easing supply-side constraints.

In addition, improved sentiment and reduced inflation and borrowing costs bode well for consumers’ purchasing power.

Regardless of these green shoots, SARS has missed its revenue targets – but not for lack of trying.

The taxman has been on a compliance crusade over the past year, using nearly every tool in its arsenal to pursue non-compliant taxpayers.

For example, SARS has teamed up with the National Prosecuting Authority’s Investigating Directorate Against Corruption (IDAC) to combat financial crimes and put tax criminals behind bars.

Jashwin Baijoo, associate director and head of strategic engagement and compliance at Tax Consulting SA, said this team-up demonstrates the taxman’s strong stance on criminalising tax non-compliance.

He said the alliance will bolster SARS’ capacity to make non-compliance hard and costly.

In addition, SARS recently issued a tender for tax consulting services, with some of the country’s largest auditing and legal firms all looking for a piece of the pie.

“SARS will immediately be able to gain access to the best private tax minds in the country to help catch tax evaders, tackle non-compliance as well as get additional tax brainpower to deal with highly complex and sophisticated tax structures,” Baijoo explained.

Delinquent taxpayers have felt the taxman’s heat this year, as the revenue service has not been afraid to issue severe fines and even jail time for non-compliance.

“With SARS having to become aggressive to combat the criminal elements in our society, taxpayers need to be aware that even non-compliance on a smaller scale and due to negligence carries with it the potential of a criminal conviction,” Baijoo said.

“Where you are already on the wrong side of the law, your only reprieve is to correctly and legally engage the revenue authority.”

“Commission of any further criminal activity will not sweep prior acts under the rug, but rather exacerbate the already severe consequences.”

SARS’ efforts have paid off, as the taxman has collected over R110 billion from criminals through its compliance programme, according to reports from Netwerk24.

This is R8.1 billion or 8% more than in the 2023/24 financial year, which shows the success of SARS’ compliance programme.

Tax Consulting SA said SARS has had a particular focus on high-wealth individuals (HWIs) in recent months.

The taxman introduced a new initiative for HWIs this year by assigning them “Dedicated Relationship Managers”, offering a more personalised approach to tax compliance and advisory services.

SARS defines an HWI as a person with gross assets worth R75 million or more. 

“This group of taxpayers plays an important role in South Africa’s economy and in sustaining revenue growth,” the revenue service explains on its website. 

Therefore, in line with global standards set by the Organisation for Economic Co-operation and Development (OECD), many foreign tax authorities have established units that serve high-net-worth clients, including SARS. 

SARS launched its High Wealth Individual Unit in April 2021 to provide clarity and certainty to HWI taxpayers and to make it easy for these individuals to comply with their tax regulations by offering a specialised service. 

“Our focus is to promote voluntary compliance, enhance revenue collection, and foster a fair tax environment,” SARS explained.

“As much as the HWI Unit is dedicated to assisting taxpayers with their legal obligations, we are equally committed to detecting and deterring non-compliance.” 

SARS said the HWI Unit would act without fear or favour to make non-compliance hard and costly – an approach it has taken to all taxpayers, with marked success to date.