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Minibus taxi industry only pays R5m in corporate taxes

But Sars says the sector is on its radar.
The taxman cometh. Image: Waldo Swiegers, Bloomberg

Only R5 million in corporate income taxes was collected from the minibus taxi industry in the last tax year, says the South African Revenue Service (Sars).

This came to light when Finance Minister Tito Mboweni responded to parliamentary questions asked by DA MP Geordin Hill-Lewis.

The ministry goes on to point out that the corporate tax contribution by the minibus taxi industry is in actual fact lower than the R5 million figure as this amount includes tax collected from the sector’s employment income.

Treasury notes that the industry does not correctly disclose income from taxi business on their corporate income taxes because it is included under a generic income source code.

“We were not able to determine income solely from taxi operations. Our analysis indicates that the majority of the taxi industry is declaring a nil return or are having a refund due to them.”

The minibus taxi industry transports 15 million people or two thirds of commuters in SA, has 20 000 owners and 200 000 employees, and is estimated to have a turnover of over R16.5 billion a year.

The industry, however, gets no government subsidies and in June 2020 Transport Minister Fikile Mbalula announced a R1.135 billion relief package to help it mitigate the impact of Covid-19.

New broom

Sars under new commissioner Edward Kieswetter is leaving no stone unturned when it comes to getting what’s owed to it though. This includes the taxi industry.

“Sars is concerned about tax avoidance across the tax ecosystem in general; this is more so in this particular industry; to this end, Sars adopting a number of targeted interventions.”

The interventions, however, are more carrot than stick as the revenue service looks to build a tax and customs system that is premised on voluntary compliance.

“The strategic intent is achieved through the creation of clarity and certainty of tax obligations, making it simple, easy and seamless to meet tax obligations and ultimately by creating a credible threat of detection whilst making it hard and costly to remain non-compliant.”

Voluntary compliance

This has seen Sars set up a unit focused on improving compliance among SMMEs (small, medium and micro-sized enterprises), which includes the taxi industry.

Sars has had “various engagements with the industry bodies” in the year 2020/21 to “create alignment as well as to educate”. It has also worked with the Department of Transport to share data on work on their taxi industry transformation agenda.

The tax collector has also started developing a compliance plan for the industry “to encourage voluntary compliance” and “potentially propose the appropriate tax regime specifically for the industry”.

Treasury says this will be concluded in the 2021/22 financial year.

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COMMENTS   14

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Two things:
1) This is a cash industry. Not a chance that you will ever have accurate numbers in a cash industry.
2) Everyone, and I mean everyone is scared of this industry. Not a chance that SARS will ever come down hard on them

Check what SARS did to Cash n Carry. But if they succeed, they may be able to help the bus system to get rid of these taxis for good

No comment on point number 2

Much luck ! Mr. Kieswetter . You will need it with these guys .

“But Sars says the sector is on its radar” Yeah, right.

Just about as much as the cANCer looters are undergoing lifestyle audits in an effort to collect wealth tax, not so?

The government created its own problems here. They allowed the transport system to implode via cadre deployment and corruption. The informal market won market share as the ANC destroyed the formal market. The informal market is competitive because it does not pay taxes and ignores labour laws and legislation. If SARS can successfully tax the informal market, it implies that they were able to change the informal market into a formal market. Good luck with that.

SARS has only two alternatives if they want to tax this industry, the fuel levy and cash toll roads.

@Sensei – ignores labour laws and legislation

Might as well add in ignore road rules/legislation, common law rules for murder, rape and intimidation and lastly ethical rules about destruction of property when demonstrating (read rioting).

All power to them.

SARS will never touch Mageza.

We cannot say this are to hard to do..do what are done to Employers, banks, real estate agents and the like as required to do.
Sars unilaterally state you are appointed as our agent , and you must do xyz admin ( for free nogal ) …so why not roll this out to the taxi associations , and state they must enforce or be held liable..

That would out get the taxi and taxi associations in a knot…Eddie can deal with them, it is the equitable thing to do!!
Years ago you would have the sars agent roam the streets , asking business for their paperwork, Eddie staff can stop taxi’s cant they?

Pravin postulated on taxing the taxi industry way back in the 90’s – now 30 something years later Kieswetter and the SARS crowd are still thinking of ways to tax the industry. SARS is as mismanaged as it has always been since 1994

Corporate taxes ? taxi owners have incorporated ? Wow.

“the majority of the taxi industry is declaring a nil return or are having a refund due to them”

um, how do they have a refund due to them ? they pay provisional tax ?

Is this nonsense or is the taxi sector more formal than I give it credit for ?

As much as I hate these irresponsible arrogant irritants on the road, a few points:
1) They are an integral and absolute necessity for our economy ( indirectly they do pay tax?) and private transport system ( where else do commuters look to? )….again the government failed all of us!
2) Do they really make substantial profits?…can commuters afford an increase in taxi fares?
3) It is a problem created by government and now they want to punish third parties!

Dear Mr Kieswetter. Start with what you can control, which is at the point of sale of new minibus taxis. There are only a handful of sellers in the market, Toyota and then some Chinese importers. Where is the mandatory requirement for a tax number of each purchaser? How about additional sales tax specific to taxis as commercial vehicles? What about the financing? If you know what the monthly repayments are on a taxi, that must be the minimum you consider as income made. What about annual licensing? Subject to a tax return!! And much higher than for normal cars!! I take payment for advice in tax rebates, thank you.

Spot on !! However the taxi bosses are all ANC supporters so do not expect anything so drastic !!!

What a lot of BS! why are some people excluded from paying TAX?

The Minibus industry is due for change.

End of comments.

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