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April 24, 2017
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Two months ago we wrote about how the Tax Ombud was now more independent of SARS and it hasn’t taken the Ombud long to flex these powers.
Over half of complaints received by the Ombud relate to the long time taken to get refunds to taxpayers. This relates to both Income Tax and VAT.
The Ombud may launch investigations if systemic problems manifest themselves and the Ombud will probe whether the slowness of refund is a systemic issue. The Minister of Finance has given the Ombud permission to proceed with the investigation.
What SARS says
SARS has welcomed the investigation and is confident of its systems, commenting:
“Due to an increase in fraud, SARS has had to react by tightening up our Risk Rules. Despite such actions SARS has only referred 11{911e10481a1f19c5a50a3a01e1fba3cf7ef90ea5fc0f63354a64d045bdc3cbbe} of cases for detailed audit. Regarding Personal Income Tax payments of 98.2{911e10481a1f19c5a50a3a01e1fba3cf7ef90ea5fc0f63354a64d045bdc3cbbe} is paid within (72 hours).”
The problem is that the large refunds are generally in the 11{911e10481a1f19c5a50a3a01e1fba3cf7ef90ea5fc0f63354a64d045bdc3cbbe} and 1.8{911e10481a1f19c5a50a3a01e1fba3cf7ef90ea5fc0f63354a64d045bdc3cbbe} statistics quoted by SARS, and as small businesses are cash flow dependent, holding these back can threaten their solvency.
So that’s all cold comfort to honest taxpayers made to wait for refunds genuinely due to them, and we can only hope that the Ombud’s intervention is successful in reducing the delays.
We should also remember that SARS will be R30 billion short in its revenue collections for the 2016/2017 year. The Minister of Finance has expressed concerns as the shortfall reverses the trend of SARS achieving or overachieving its collection targets since 2009.
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