Fin24

Sars to clamp down on tax dodgers

2012-04-16 14:49

Cape Town - Rich people not complying with tax laws will face the music, Finance Minister Pravin Gordhan warned on Monday.

In written reply to a parliamentary question, he said the amount of R50bn reported in the media as being owed by high net worth individuals (HNWI) was an estimate of gross income rather than tax, and was based on statistical extrapolation of third-party data.

“An accurate estimate of the potential tax liability of this group is not possible as each case is unique,” he said.

For example, in some instances income might be held in trusts, companies, or other structures, while in other cases the income might have been derived from dividends or capital growth rather than remuneration, and therefore qualifies for a lower rate of taxation.

That being said, the SA Revenue Service (Sars) is taking steps to improve compliance among HNWI. These include establishing a dedicated unit to handle the tax affairs of the HNWI segment. Improvements in compliance with the tax laws will be a focus area for Sars this year.

Sars is using its own data and data from third parties to identify failure to register as a taxpayer, undeclared income, and a variety of other forms of non-compliance.

Gordhan said Sars has also commenced audits and investigations on a number of wealthy individuals and their associated entities, such as trusts and companies.

Given the complexity of tax affairs of many HNWIs, audits and investigations in this segment usually require a substantial and extended commitment of resources.

One such case involving over R200m in tax and over R400m in additional tax involved litigation in multiple jurisdictions and stretched for over a decade.

International roamers


HNWIs are often internationally mobile, with assets and activities in other jurisdictions which demand a greater level of international cooperation.

South Africa currently has 70 double taxation agreements and five tax information exchange agreements in force that provide for the exchange of information with other jurisdictions, he said.

Sars has also commenced joint audits with jurisdictions like Botswana, the United Kingdom and the United States with respect to HNWIs.

“The legislative framework has been modified to limit arbitrage opportunities and close loopholes.

"As examples, the higher CGT (capital gains tax) and dividend tax rates have helped narrow the arbitrage gaps between normal income and capital gains and between the income derived in an individual’s hands and through a corporate entity.

“As noted earlier, the information reported on by the media was based on a statistical extrapolation which indicated that there could be up to 9 300 individuals in South Africa who meet the Sars criteria for registration as a HNWI.

“This appears at odds with Sars' current registration of 2 300 HNWI,” he said.

Sars is conducting follow-up research and risk assessment to identify actual cases of non-compliance, including failure to register as a taxpayer.

Where non-compliance is established action is taken, including registration of the individual, imposing any tax outstanding, additional tax (understatement penalties) of up to 200%, and interest on outstanding amounts.

Administrative penalties for failing to submit income tax returns could also be imposed.

“Collection efforts to recover the taxes payable, within the timeframes set by law, have begun on cases that have been finalised. Where appropriate, individuals could also face criminal charges,” Gordhan said.

Comments
  • Tuco - 2012-04-16 15:16

    this is the only entity of govt that is upper efficient. Collecting money from tax payers i give them a 10/10. misappropriating the tax payers money to line pockets another 10/0. spending the money to improve everybody's lives a measly 1/10

      Wimpie.Haefele - 2012-04-16 15:31

      You are very generous giving them an 1/10 for improving the lives of all South Africans.

  • sharon.truebodyvice - 2012-04-16 15:23

    I hope and pray that includes all the anc fat cats, and their families

  • Hendrik - 2012-04-16 15:29

    Ineptocracy (in-ep-toc'-ra-cy) - a system of government where the least capable to lead are elected by the least capable of producing, and where the members of society least likely to sustain themselves or succeed, are rewarded with goods and services paid for by the confiscated wealth of a diminishing number of producers.

      Michael - 2012-04-16 20:28

      Ineptocracy: Can't find the word in the Oxford or Cambridge dictionaries! Where, apart from these posts can I find existence of the word?

      betsy.compaan - 2012-04-17 15:10

      http://www.urbandictionary.com/define.php?term=ineptocracy

  • Deon - 2012-04-16 15:33

    I wonder how long are we going to wait till the "fat boy's" tax case gets to the court if ever?

  • Neels - 2012-04-16 15:42

    Listen Pravin Gordhan start at goverment first they are stealing and abusing our tax money that we work so hard for. We as south africans are so fedup with this corrupt goverment. Whe are not stupid we all know what is going on.

  • justin.pretorius - 2012-04-16 15:43

    I hope Kulebuse will be one or is the regime impotent?

  • Elsabe - 2012-04-16 15:47

    When will SARS pay out monies owed to individuals and companies for more than a year? Does this only work one way?

  • Neels - 2012-04-16 15:47

    Malema first

  • carel.hayden - 2012-04-16 15:48

    Hey Pravin, clean your own house before you look elsewhere to gain Media attention, right now, your "group" are rotten to the core.

  • Irene - 2012-04-16 15:50

    If SARS is going after the mega-rich I sure hope they nail the entire anCancer cabinet. But why only target the mega-rich? What about the so-called 'poor' who aren't even registered for tax but are the very ones who claim all the benefits? Each and every person in this country should be paying the SAME rate of tax. It's unfair to tax high earners at a higher percentage just because they have the drive to get off their backsides and create wealth for themselves. Why should they be penalised?

  • Derk - 2012-04-16 15:52

    Is the African National Circus running out of money?

      Bob - 2012-04-16 16:22

      No they just need extra, I mean their chief has a big wedding coming up, another big ongoing expense, shame it just never gets any easier for them, how would you like the expense of four wives, twenty kids, big celebrations, planes to buy, it just never ends the poor things.

  • Leon - 2012-04-16 16:10

    If there was any form of service delivery; I would have said good... Now you're only stealing with more abandon.

  • Mark - 2012-04-16 16:18

    Good idea SARS. Start with Politicians, then MEC's and finally the low-life incompetant Municipal Officials. That way, you will be assured of success.

  • JohnnoBfree - 2012-04-16 16:38

    How about spending a bit more money fighting corruption, maybe SA would have enough money to deal with things like housing etc. Then SARS could give the hard working chaps who do pay taxes a bit of a break.

  • Grace - 2012-04-16 17:11

    Rich people not complying with tax laws will face the music, Finance Minister Pravin Gordhan warned on Monday..... SARS set the example and start with our government!!!

  • Mark - 2012-04-16 17:47

    Taxation = theft - time for a tax boycott to bring this corrupt and inept government to its knees

  • Michael Kleber - 2012-04-16 18:20

    Well Pravin if our taxes were better spent people might be more forthcoming to pay , its all good and well to pursue tax dodges , but put as much effort in pursuing the officials that waste our tax money on family , cars , corruption etc , we all know its rife at the moment

  • Multi - 2012-04-16 18:27

    TAX= Take And Xcape....you will never see one more sent from me or my friends..be sure of that. You screwed me with 59 loyal years of tax earnings..I will not pay for a new fence

  • Bless Boswell - 2012-04-16 18:43

    Perhaps mr Gordhan should publish a priority list - the order in which SARS will pursue overdue taxes: first in line, all suspect members of the government, then the tenderpreneurs, then those that are known dodgers, and maybe then, the rest of us. We are all soft targets - we need to fight back.

  • Garth - 2012-04-16 18:57

    And here is a bet that all the additional funds that they raise will simply be paid out to ANC fat-cats as bonuses!!

  • Dave - 2012-04-17 06:39

    We're in an unsustainable economy, the wheels will fall off unless the government curtail overspnding,thft and corruption.

  • Roy - 2012-04-17 14:33

    @Zak Avnon - It won't include the anc fat cats - unfortunately we don't have sufficient resources to investigate these people along with their wives, children, nephews, ex-wives etc etc etc. Given that Richard Mdluli still hasn't been put in jail along with all his relatives, friends, drug dealers etc it sends a clear message out to the rest of his deployed cadres that the system isn't capable of bring people to book. Here's a question to propose in parliament - How many corrupt officials have been found guilty of offences and are currently serving out their sentences behind bars? Shaik er no. Selebi er not quite, Cele er no and the list goes on. The people want results - better start building more prisons

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