Sars to hit 300 000 companies with fines

The SA Revenue Service, as part of a move to boost its revenue collection, is looking to nail 300 000 companies with penalties for failure to submit corporate income tax returns.

On the sidelines of the Tax Indaba in Johannesburg this week, Fabian Murray, acting Sars chief officer for business and individual tax, said that, at present, Sars imposed penalties on those who didn’t file their personal income tax returns, however, it was now also going to impose fines on companies that didn’t file.

“We are at a stage now where we are relatively comfortable, based on the work we have been doing with the Companies and Intellectual Property Commission, that our register is in good nick and we can start imposing penalties,” Murray said.

“The system development has been taking place and it will go live on December 7. We have done the numbers – we understand exactly who the corporates are that we will issue with penalties.”

Acting Sars commissioner Mark Kingon said that about 500 000 new companies were registered every year, and “the vast majority yield nothing”.

He added that, currently, the debt book on penalties was R9 billion for individuals where there were two or more returns outstanding.

Getting back on track

In another development, Sars came under fire this week at the Tax Indaba for paying lip service to turning around local tax collection and getting its service back on track.

Patricia Williams, a tax partner at law firm Bowmans, said: “Supposedly we now have a new regime, new people at Sars, new people in politics and, at the same time, we have at the back of our minds – but wait a minute, these people have been here all along.

“At this stage, it feels like we’re being given platitudes on what is going to be different. We are told things like there is going to be the Sars service charter now.”

Sars’ efforts to meet its statutory requirements weren’t up to scratch, Williams added.

“We are saying we are going to do certain things. I would like to see these things done already. I think the aspirational targets that we have should be even higher. This thing of ‘well, we are to try and sort of do what’s in the law’ is not good enough for me.”

On a similar note, Sugar Ntwampe, tax expert at the SA Institute of Professional Accountants, said Sars’ turnaround times weren’t being adhered to.

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“This has been a very dark time for us because we have seen money that has been collected from taxpayers being spent the way it was. There was no consequence management. Anything went. No one was being held responsible for money that was being spent,” Ntwampe said.

“There have to be control measures. Measures that will make sure that this money is not just spent the way it is. The way it is now – we think there is nothing in place. There are no control measures in place.”

Kyle Mandy, a partner and head of national tax technical at PwC, said that it would be a journey along a “long, hard road” to rebuild Sars.

“It will take a minimum of three years – more realistically, about five years – to rebuild Sars and bring it back to where it was,” Mandy said.

In another development, Sars chief officer for governance, international relations, strategy and communications, Hlengani Mathebula, said during an interview at the Tax Indaba that the re-establishment of the Large Business Centre was “going well”.

The disbanding of the Large Business Centre, which used to contribute 30% of Sars’ revenue, in 2015 under Sars’ new operating model has been one of the reasons put forward for why the tax collection agency has been missing its revenue targets.

The unit fell by the wayside under the leadership of suspended Sars commissioner Tom Moyane after a restructuring carried out together with Bain & Company.

The Large Business Centre offered a more customised service to large business taxpayers and high net-worth individuals.

Mathebula said he was hoping that the Large Business Centre would be re-established by April next year.

He said he had constituted a multidisciplinary team of about 25 people to oversee the process of rebuilding the centre.

“We have done the definition of what a Large Business Centre client is supposed to be. We have just finalised the job description of the head of the centre and what jobs we are going to advertise. We need to thoroughly consult to ensure that this process is as credible as it possibly can be. We are at the most crucial phase of this project.”