By Dylan Bettencourt
- SARS says most unpaid tax debt comes from VAT, and even directors or managers can be held personally liable.
- Taxpayers who cannot pay can still approach SARS for relief, but ignoring tax debt could lead to fines or jail time.
South Africa’s unpaid tax debt has reached a record high of nearly R500-billion, according to the South African Revenue Service.
SARS says Value-Added Tax, or VAT, is the biggest problem.
While SARS has collected about R63-billion in unpaid tax so far, this is still far less than the total amount owed.
VAT is one of the government’s biggest sources of income, bringing in hundreds of billions of rands every year. But SARS says many VAT-registered businesses are not paying what they owe.
There are about 900,000 VAT vendors in South Africa, but only around half are active.
Tax specialist Jashwin Baijoo said business owners, directors and managers need to understand that SARS can now hold individuals personally responsible for unpaid tax, BusinessTech reported.
This means that if a business fails to pay tax because of negligence or fraud, the people who control the company’s finances can be held liable, even if they are not officially in charge of the books.
Baijoo warned that unpaid tax does not only damage a business’s reputation. It can lead to heavy penalties, legal action and even prison time in serious cases.
He said SARS can treat some failures to submit or pay tax as criminal offences, with possible jail terms of up to two years. More serious cases involving fraud can lead to longer sentences.
However, SARS says taxpayers who are genuinely struggling to pay should not ignore their debt.
The law allows taxpayers to approach SARS to apply for payment arrangements or reduced settlements if they cannot afford to pay everything they owe.
“These options exist for people who engage SARS honestly and early,” Baijoo said.
Pictured above: VAT.
Image source: ActionSA
