Widening The Net! Throwing a Lifeline?
05 January 2007
Posted by: Author: Sobantu Ndlangalavu
Widening The Net! Throwing a Lifeline?
TAXtalk spoke to Sobantu Ndlangalavu Senior manager heading up the small business tax amnesty process at the South African Revenue Services (SARS)
Q: In his budget speech minister of finance, Trevor Manuel said that 12 000 small businesses had already applied for amnesty. Are you on target?
In the last week of February the number had already risen to 13 500 applications, with 18 000 application forms issued to potential applicants.At present we are receiving about 300 application forms per day.But we are not satisfied with the response.The greatest resistance we have picked up comes from small business owners who cannot believe that this amnesty is real.We hear phrases like "Where’s the catch?” and "This is too good to be true” all the time.
Q: What numbers were you looking at?
We started of f the process with no empirical data available on small businesses in South Africa.Four months into the process we realised that research was imperative to set targets.We initially expected to get 100 000 new taxpayers into the net.However, at the moment it seems that there will be a last minute rush, putting severe strain on SARS’s resources.A more realistic figure may be around 40 000 to 50 000, which for SARS will still be a great achievement.
Q: What amount do you envisage to add to government coffers through the amnesty?
SARS is now engaged in government’s focus on the SMME sector and sees the process as supporting other government departments such as the Department of Transport with the taxi recapitalisation process.The objective of the amnesty was never to get additional revenue for the fiscus.At the moment SARS is not under fiscal pressure to deliver more revenue and collections are on target.The amnesty must broaden the tax base and increase the number of businesses who are registered as taxpayers.
Q: What do you intend to achieve with the amnesty?
The aim of the amnesty is threefold:Firstly, we want to regulate the tax affairs of small businesses. Secondly, we would like to increase the culture of compliance and thirdly, we would like to broaden the tax base.A spin-of f of the small business tax amnesty is the fact that it was built into the taxi recapitalisation process so that taxi owners can enter into the process without the fear that their tax affairs are not in place.
Q: It might seem as if the information about the amnesty is not filtering through to the masses.What plans are in place to get small businesses on board?
After doing the research mentioned earlier, we have changed our strategy.We are now talking to the different small business sectors such as retail, entertainment, transport, construction and more.We are also talking to small business bodies such as the South African Chamber of Business (SACOB) and the National African Federated Chamber of Commerce and Industry (NAFCOC).From March we also launched a campaign in the mass media including television, radio and print.Another very valuable resource that we are harnessing is the 15 000 SARS employees.They have become the flag carriers for this process because we realise that every employee functions within a community.Staff members have been given pamphlets to take to people in the community who they know are small business operators.Finally, SARS has a strong education department that is currently running workshops focussing on the small business amnesty.
Q: How does your information campaign work?
The campaign has different components. SARS employees do face-to-face recruiting by going on small business walkabouts.We also speak to different sectors such as the taxi industry and the Estate Agents’ Board, as well as different municipalities.Over and above the personal approach, we have also launched a mass media campaign spanning broadcast and print.On the electronic media front we have a dedicated email and our call centre number is 0860121220.There are trained agents at all SARS offices to assist applicants.
Q: Are you satisfied with the public’s reaction?
The public has reacted very positively, but there is a culture of procrastinating.With the foreign exchange amnesty 25 000 applications were received in the last week.This time around we hope to get applications in earlier, rather than later.
Q: South Africans are known to be reactive rather than proactive. Will you accommodate people who want to apply after the deadline?
31 May remains the deadline.At the moment we are appealing the small business owners to hand in their applications, even though they do not yet have their financials in place.That can follow soon after the application has been received.Come June, we will turn to enforcement.This is not a threat, but we know where the small businesses are.One of the slogans of the campaign is "Come to us before we come to you”.
Q: Do you have some thoughts on the taxi industry?
The taxi industry is just one of 12 sectors we are talking to. Of these sectors, the taxi industry has been the most cooperative to date. Of the more than 13 000 applications we received to date, in excess of 25% of applications have come from the taxi industry. It is important for taxis to apply if they want to take part in the taxi recapitalisation process.A while ago we talked to taxi owners in Krugersdorp.After the talk 68 taxi owners applied for amnesty then and there.It seems as if we have been able to win the trust of taxi owners.This is in part because we talked to the South African National Taxi Council (SANTACO) last year and they bought into the process.They appreciate the drive towards getting taxi owners to apply.
Q: Say a person now living overseas is renting out his South African property but has fallen behind on tax.Will the amnesty also apply in this case?
Definitely, to make it easier for such people, they can apply online.
Q: What happens if you are a registered taxpayer but has not been totally honest.If you apply for amnesty, will you forever be under SARS’s scrutiny?
We are only looking at the 2005/06 tax year.Anything done before that date is of no interest to us.This is amnesty in the true sense of the word.BUT, it is important to make full disclosure.In going forward, SARS will look at the amnesty applicant’s business.Say for example a person applied for amnesty and said that his income for 2005/06 was R100 000 and a year down the line, this person turns out to be a multi-millionaire.His tax affairs will then be scrutinised carefully to see if he made full disclosure when applying for amnesty.
Source: By Sobantu Ndlangalavu (TaxTALK)