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Individual Tax Consultant Randburg

SARS wants to cut the R82.5bn its owed

12 Apr 2013

Taxpayers owe the South African Revenue Service (SARS) R82.5bn. If paid this would result in a significant reduction in government's forecast budget deficit of R168bn for 2013-14 and reduce the deficit to 5.2% of gross domestic product, a more prudent level.

SARS is concerned at the size of its debtors book and it will try to reduce it in the year ahead. Efforts to do so have been hampered by disputes, appeals and objections by taxpayers.

In the year to March SARS cut outstanding debt by R6bn to R82.5bn from the R88.6bn last year.

Finance Minister Pravin Gordhan earlier this month said the ratio of outstanding debt to total revenue was about 10%. SARS aimed to cut this to 6% over the next five years.

According to SARS's 2013-14 strategic plan tabled in Parliament on Thursday (11 April), the size of the debtors' book "is mainly due to poor accounts maintenance and the impact of the slow recovery on taxpayers ability and willingness to pay."

It said that SARS planned to modernise processes which "would assist in improving the maintenance of taxpayer accounts and improve debt collection efforts".

The report said compliance by tax practitioners was low. They owed more than R260m for assessments in their personal capacities. Legislation was planned to address this.

Closer collaboration will be sought with other tax authorities to counteract the continued proliferation of sophisticated tax avoidance and evasion schemes which SARS has identified as a major risk.

The Organisation for Economic Co-operation and Development produced a report this year on how multinational corporations used cross-border structures, transfer pricing, intra-group transactions and hybrid mismatches to exploit loopholes in local tax codes, double taxation agreements and tax treaties.

SARS, the Treasury and the Financial Intelligence Centre are in talks with the US on exchanging information related to the US Foreign Account Tax Compliance Act which aims to improve compliance with regard to foreign financial assets.

Source: Business Day via I-Net Bridge

Source: I-Net Bridge

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