Crackdown on cash businesses

Cape Town - In a bid to widen SA's tax net, Finance Minister Pravin Gordhan has promised to come down hard on tax evaders. But he also offered non-compliant taxpayers an opportunity to come clean.

In his Budget speech on Wednesday Gordhan noted: "Getting everyone to pay their fair share is a critical means of keeping the overall level of taxes moderate."

He said further steps were under way to tackle the tendency of tax evasion.

Gordhan said the SA Revenue Service (Sars) would use third-party information and targeted lifestyle audits to take a "much tougher" approach towards cash-based businesses that avoided VAT.

He said tough action would be taken against firms that did not pay over PAYE and other taxes.

Gordhan said Sars would also reduce tax avoidance and tax structuring by tightening company car and other fringe benefit rules.

He said steps would be taken against several sophisticated tax avoidance arrangements - like the use of transfer pricing and cross-border mismatches.

"The taxpayers of South Africa are not lenders of last resort and Sars is not a bank."

But Gordhan also offered a compromise to non-compliant taxpayers.

He announced a voluntary disclosure programme, which would run for 12 months from November 2010.

He said non-compliant taxpayers could use this window of opportunity to disclose and pay undeclared tax liabilities at a reduced interest charge and without penalties.

Sars would also consider aligning exchange control violation penalties with this voluntary disclosure opportunity.

- Fin24.com