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More Leniency For Tax Dodgers

29 March 2010   (0 Comments)
Posted by: Author: Jackie Cameron
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More Leniency For Tax Dodgers

"Confess your sins, and we'll drop penalties, reduce the interest you owe us”—SARS

Tax Dodgers are being given afresh opportunity to come clean to SARS. The aim is to broaden the taxpayer base.Under a voluntary disclosure programme, non- compliant taxpayers will be able to disclose and pay undeclared tax liabilities at a reduced interest charge and without penalties, Finance Minister Pravin Gordhan announced during his 2010 Budget speech.

Offshore transgressions are also likely to be forgiven, as"consideration will also be given to align exchange control violation penalties with this voluntary disclosure opportunity”,he said.The programme, which will exist for 12 months from November this year, is in line with international practice, said Gordhan. "SARS has always shown leniency and understanding for those who come forward voluntarily to disclose prior noncompliance.”

Those who don't come forward can expect some heat from SARS—particularly if they have not been able to resist an attention grabbing lavish lifestyle.Gordhan said that SARS will use third party information and "targeted lifestyle audits” to take a much tougher approach ,particularly towards cash-based businesses that avoid VAT.Also under scrutiny and up for "tough action” are companies that do not pay over PAYE and other taxes deducted from employees.

Gordhan told his fellow Parliamentarians: "The taxpayers of South Africa are not lenders of last resort, and SARS is not a bank!”Steps will also be taken against" several sophisticated tax avoidance arrangements, such as the use of transfer pricing and cross-border mismatches”.The voluntary disclosure programme may be good news to tax dodgers who have had sleepless nights over their affairs, but it is likely to irritate the thousands of severely-squeezed compliant taxpayers who prop up the national coffers and will see their few remaining benefits taxed further.

Gordhan said that government will "take further steps to reduce tax avoidance and tax structuring by tightening company car and other fringe benefit rules, and through measures to ensure that employer deductions are fully reflected in the gross income of employees”.Employee insurance packages will be taxed fully as fringe benefits on a monthly basis,it is proposed.

Tax-weary individuals may take some comfort from the finance minister's interest in seeing the tax base broadened.He would, in particular, like to bring more high networth individuals into South Africa's relatively small net of individual taxpayers.The National Treasury provided more detail on the voluntary disclosure programme.It said, in its review of revenue trends and tax proposals released simultaneously with the Budget: "In line with greater international co-operation over bank secrecy and enhanced measures to prevent money laundering, the voluntary disclosure period will also enable individuals with unreported banking accounts overseas to fully disclose such untaxed revenue. The full amount of tax will remain due.”

"In the light of this step,government proposes to do away with the discretion of the SARS to waive interest charged on unpaid provisional tax,” it said.It also emerged that the general level of tax compliance has"deteriorated” during the recession,which has led to steps by SARS to"focus” its enforcement and audit capacity and modernise systems.SARS will also enhance its focus on "large taxpayers and high net worth individuals”, said Treasury

Source: By Jackie Cameron (Tax breaks)


Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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