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Sars sees serious slippage in compliance culture

Revenue service faces pressure to up its game.

The South African Revenue Service (Sars) has expressed concern about the level of non-compliance with the submission of tax returns.

In the last five years the number of non-submission of returns for Pay-As-You-Earn (employee tax) has increased by 77% and for Value Added Tax (VAT) by 32%.

Randall Carolissen, head of research at Sars, said when economic growth lags, it is usual to find a dip in compliance. “The valley has however never been as deep as we have seen in the last five years,” he said at the annual Tax Indaba in Sandton.

“In pre-democracy times people used to boast with the fact that they were not paying their taxes. We have moved out of that era and we do not want to move back there,” he said.

In a session addressing the psychology of tax behavior during recession, Carolissen said Sars does not want a case where people resent others for getting away with murder while they try to remain compliant.

Sars should have a “tough and honest engagement” with all taxpayers and shareholders to identify the areas where it fails to meet taxpayer expectations and Sars must deal with it.

The openness of Sars to engage with the people it serves is paramount. It is a fiscal responsibility, he said.

There is a lot of pressure on Sars to step up its game. The tax authority has lost high profile individuals, and its technical skills base has been eroded. Carolissen admitted the skills set has to be lifted in its entirety.

PKF tax partner Paul Gering, said the caliber and level of audits they have been experiencing is certainly not the same as five years ago.

“The fact that there has been such significant non-compliance with returns, which are not submitted, is an indictment on the level of enforcement. The fact that the numbers are growing and not shrinking is an indictment on enforcement,” he said during question time.

Carolissen said Sars’ enforcement barometer depends on the compliance climate.

“The trick is to find the balance between enforcement treatment and the climate. With the slippage of compliance we have seen, there is a need for a severe increase in enforcement efforts.”

He said it should perhaps have been done sooner, but in the current climate people again have to be made aware that tax is not a discretionary payment.

“We are noticing that people are using payments from VAT and PAYE for their own cash flows, and they think they are allowed to do so,” Carolissen said.

People have to pay their taxes, whether they like the taxman or not. “There are people who shift their morality as the economic environment changes,” he said.

There is a close relationship between fiscal citizenship and democracy. If people are unhappy about their tax authority there are different ways to deal with it – like approaching the courts or the Office of the Tax Ombud.

If South Africans do not honour the contract between themselves and government to pay their fair share, there will be anarchy, Carolissen remarked.

Patricia Williams, tax partner at Bowmans, wrote in an article that Sars may be tempted to respond with a knee-jerk reaction of more audits and higher penalties for non-compliance.

She said Sars must focus on legitimate power. “Given the high level of penalties in the Tax Administration Act, there is a real risk of an antagonistic tax environment developing that promotes non-compliance.”

Tax Ombud Bernard Ngoepe (pictured below), said Sars should take the publication of the long overdue Service Charter serious. The charter was drafted in 2005 and should have been released at the end of last year. It has not happened.

Picture: Moneyweb

Ngoepe said it will offer taxpayers with a benchmark to measure whether they are being treated fairly or not. He said in difficult economic times one cannot close ones eyes to corruption and the fundamental impact it has on tax morality.

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“If South Africans do not honour the contract between themselves and government to pay their fair share, there will be anarchy, Carolissen remarked.”

It could be argued that there are two parties to this contract and that government is not meeting its obligation in seeing that revenues are appropriately used for the benefit of all and not just to fund rampant corruption and theft of state assets. I would suggest government is at the moment in default and the instigator of non compliance and the resultant anarchy. Look in the mirror my friend.

130 votes. This must be a moneyweb record.

Make that 226 and counting…..

“The valley has however never been as deep as we have seen in the last five years.” You can say that again. There’s less than a million of us responsible for more than half of tax revenue. We don’t like what you’re doing with our money. We will make sure you fix that, or we will ruin you.

Why pay tax when it is stolen or wasted?

Thank you

And the more they try tax us, the less they will get.

Moyane was put in the position he holds to facilitate some of the biggest tax heists in our history. This notwithstanding that he skimmed millions of Rand during the construction of the Kokstad prison.

Tom – turn yourself in – to the Kokstad prison

Piss off. Not only do you double tax people with levies, tolls and VAT on top of PAYE you expect the tax base to then pay double for basic services like schooling and security if they want anything decent or respectable. If anyone has violated the contract its the government.

You waste and squander the hard work and goodwill of the people who pay for your supper. Only 2 ways to deal with this. Vote with the ballot or vote with your feet, but considering the tax base is the minority Im going to go with people are going to have to vote with their feet since they dont have the numbers. You will loose your tax base one way or another.

Till then we will fight you in the trenches we will fight you on the beaches in the boardrooms and on the paperwork. 😛

This is one of the best replies I’ve seen of late

Glad to see some people willing to make a stand.

Thank you Noryt

Just stick to your part of the contract—investigate the Guptas and get them to pay what is due. That will dramatically increase tax morality.

What really hacks me off about SARS is that they treat tax payers like criminals when the majority are honest persons who have no control over their tax forms as they are all prepopulated with data. I am a pensioner who has a living annuity as a further income and yet for the second year in a row I am being subjected to an audit – for what purpose, there is no opportunity to syphon off vast sums of funds.
SARS sets themselves up to look like a monster to the general taxpayer – there is no congenial relationship whatsoever

We are all aware of the allegations against SARS w.r.t. delaying refunds. Judge Ngoepe warned a year ago at the 2016 FISA Conference that a tax revolt is a possibility if SARS does not treat taxpayers fairly. He did not think it was imminent then. A year has passed and I haven’t seen anything that suggests that SARS has changed its attitude and approach to taxpayers. It is, as grahamcr suggests, a default position of “the taxpayers are crooks until shown otherwise”. A slippage in compliance, as referred to by Carolissen, has a cause, and that cause is unlikely to be sheer crookedness on the part of a large number of taxpayers. If taxpayers regard the social contract as being broken by the State, some will respond by trying anything to minimise their tax liability. I am not advocating illegal action, I’m describing what I see.

If only Tommy Booi and Muluti Gigarbage could take a step outside of Gupta’s bubble and see the damage that THEY are inflicting on the issue of compliance. It is their direct arrogance and defiance of investigating and bringing to book the largest moneylaundromat in SA history.
If they can go after Bobroffs and attach the R100m in Israel as well as hound Dave King for 10 years and settle for R786m then please pray tell how does the Commissioner himself ensure that an IRREGULAR payment of R70m VAT is refunded to Oakbay without so much as an audit.
A friend’s company was legitimately entitled to a R10k refund and had SARS all over his ass like a rash. So compliance with SARS is the further-est item on my agenda.
SARS compliance starts with a compliant (read honest and ethical) leader and the rest of SA will follow – it is really as simple as that. It does not take a CA (SA) or MBA or Tax Master to figure that out.

SARS should show that they are collecting a fair share of tax from the politically connected and the Guptas. A thorough audits of their companies are required to see that wedding costs were not claimed, transfer pricing between here and Dubai would also be an area to investigate with the companies. Lifestyle audits on the Guptas and the Zumas and most of the cabinet are also required to determine whether they have appropriately declared all their income which has enabled them to become super wealthy in no time. While about it any donations received by the families should be traced to see that donations tax has been paid. That rather than facilitated multi million Rand refunds would indicate a more even handed approach to ensuring tax compliance. And don’t pull the secrecy provisions – they are only applied by SARS when it suits them. In any event we want to know whether these people are subject to appropriate scrutiny, we don’t need to know the details of their tax affairs.

Unfair treatment and bullying tactics used by SARS to extort money are not appropriate. Not to mention raising assessments by underhanded means in the hope that the taxpayer won’t pick them up and so get tax not due. Fix some of these issues and maybe it will assist with tax compliance.

“In pre-democracy times people used to boast with the fact that they were not paying their taxes” Now, in post-democracy, state capture times, when Corruptheid has replace Apartheid, people are again not wanting to feed the gravy train.

The self-serving, self-righteous tone matches SARS’ response to the Ngoepe Report. One may be certain that if SARS is roguing VAT (breaking “the contract between [taxpayers] and government to pay their FAIR share” [my emphasis]) it is doing the same with other taxes. Many of the shortcomings identified by Ngoepe were not isolated incidents but SYSTEMIC and procedural.

If SARS wants its revenue to grow it should rely upon the economy to grow, that is, for taxpayers’ revenues (and hence taxes) to grow — a win-win situation rather than the “zero sum” thinking that permeates the ZANC and its deployees, together with its class antipathy to the productive sector.

How can any self-respecting taxpayer continue to support a criminal government that uses the taxes to suppress its people and keep itself in power. Our taxes are now no better than protection money being paid to a criminal mafia and those very taxes are the foundations of the mafia’s power. No money – no patronage.

Well said !!

SATaxPayer, the fact that they’ve treated us so badly like this for so long in itself is a crime

They crossed the line – now its full on war.

Pssst. There is a huge Fringe benefit to be collected at Nkandla from No. 1. Once you have done that come and talk about compliance otherwise get lost.

Biggest rip off of Tax Payers in the South African history.

First we pay one of the highest tax rates in the world and we get the least back for it!

Then we have State Capture, Eskom, SAA, SABC and Municipalities all in the news for misusing the funds which we have have worked so hard for!

Then we have a mostly incompetent parliament and so called leaders!

What did they expect? this shows that South Africans are boiling fed up!

Yup

One TRILLION Rands now the unofficial estimate lost to govt corruption since 1994 !!!!

WTF ????

We are Tax Slaves to a very Corrupt Government.

They are going bankrupt!

Yes

But they are bankrupting us in the process too !!!

Maybe the Tax Payers are learning from the Politicians and Government officials.

They are mostly getting rich.

All of a sudden it now becomes a compliance factor. For PAYE, people may not submit their tax forms but their money is already deducted at source and paid out to SARS. The so called “ROGUE” unit was created to investigate and bring to book the ones that were circumnavigating tax laws. That specialist knowledge has now been got rid of from SARS.

Well then… Give me better value for my money !
Stop stealing and squander it !

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