South Africa: Taxpayers to Face Fines or Jail Time for Small Tax Mistakes

As a result of an amendment to tax legislation, prosecutors will no longer have to prove that a taxpayer wilfully broke the law, which means a court may find a taxpayer guilty of an offence even if they were negligent or made an unintentional mistake. This includes things such as not alerting SARS of a change of personal information or failing to keep records from previous tax years.

Previously, South African taxpayers could only be fined or imprisoned if they wilfully and without just cause committed an offence. Taxpayers should be aware that they can no longer claim a defence of ignorance. The below covers all the offences which could now result in criminal liability:

• Failure to register for tax or to notify SARS of a change in registered particulars
• Failure to appoint a representative taxpayer or to notify SARS of a change in representative taxpayer
• Failure to register as a tax practitioner, if required to do so
• Failure to submit a return or document to SARS or the failure to issue a document to a person as required under a tax Act
• Failure to retain records as required
• Failure to comply with a SARS directive
• Failure to furnish information or documents requested, excluding information requested for revenue estimations
• Failure to give evidence when required
• Failure to disclose to SARS material facts required
• Failure to comply with tax payments including third party payments
• Failure to comply with withholding tax obligations when required
• Failure to issue any employees’ tax certificates or to notify SARS of having ceased to be a registered employer
• Failure by an employer to deliver to any employee or former employee any employees’ tax certificate or notify SARS of having ceased to be a registered employer
• Failure to submit provisional tax estimates
• Failure to comply with the payment of VAT on imported services and otherwise
• Failure to submit VAT returns and special records
• Failure to include VAT in the advertised or quoted price or failure to separately indicate the VAT exclusive price and the VAT inclusive price
• Failure to keep sufficient records as required

As a result of this new amendment to legislation, taxpayers should ensure, now more than ever, that they respond to all SARS communication as soon as possible and register for tax if required to do so.

The below list of offences could give rise to criminal liability, however only if the taxpayer committed them with intent:

• Submitting a false certificate or statement in relation to returns, records and reportable arrangements
• Issuing an erroneous, incomplete or false document
• Failure to reply to or answer truly and fully any questions put to the person by a SARS official
• Obstructing or hindering a SARS official in the discharge of duties
• Refusal to give assistance during an audit or criminal investigation
• Holding oneself out as a SARS official
• Dissipating assets or assisting another person to dissipate assets in order to impede the collection of tax
• Using any amounts deducted by way of employees’ tax for purposes other than paying it to SARS
• Issuing documents purporting to be employees’ tax certificates if not an employer or authorised to issue
• Declaring that the price chargeable in respect of supplies is subject to VAT, where in fact no VAT is payable or charging VAT in excess of the VAT properly leviable
• Issuing more than one tax invoice, credit note or debit note in respect of a VAT supply

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For more information on South Africa’s tax and payroll landscape, browse activpayroll’s Global Insight Guide to South Africa.