Budget 2021: Tax man targets the rich with new Sars unit

Sars has turned its focus onto the country’s top earners with a new unit for compliance enforcement. The revenue collector announced this just hours ahead of what has been deemed the most important budget since the 2008 global recession.

“For Sars to continue to provide a customised and seamless service to various categories of taxpayers, we are establishing a separate unit to focus on individual taxpayers with wealth and complex financial arrangements,” it said in a statement on Wednesday.

The unit, which will be known as High Wealth Individual Taxpayer Segment (HWI) will initially be located with the Large Business & International Taxpayer Segment (LB&I).

This unit will focus on high wealth individual taxpayers with complex financial arrangements.

Also Read: How ‘misinvoicing’ gets R300bn out of SA annually

As half of working age South Africans face unemployment and little room for wage increases, businesses, corporations and industries hit by the pandemic are trying  to get government away from social spending and tax increases to focus on stimulating the deflated economy.

While the agency was committed to its intent to develop and administer a tax and customs system based on voluntary compliance, it said it was equally important for SARS is to make it hard and costly for those taxpayers who do not comply.

“We will be offering a differentiated service, as we do with other tax types, to the individuals with significant wealth, often derived from multiple sources other than a salary and who employ complex, often offshore, financial arrangements. We believe that statements of assets and liabilities will often say more about their financial affairs than statements of income.”

In 2016-17, taxpayers were given the opportunity to regularise their tax affairs to account for their offshore holdings through the Special Voluntary Disclosure Programme (SVDP). This was also done through the ongoing Voluntary Disclosure Programme (VDP) under the Tax Administration Act, 2011.

Some taxpayers took advantage of this, according to SARS, but not all.

“Despite the window of opportunity to regularise their tax affairs, some taxpayers chose not to do so. The information that SARS has received comes from 87 jurisdictions across the world detailing the offshore financial holdings of South African taxpayers. We intend to undertake a careful review of the information and audit it where necessary.”

Those who want to regularise their tax affairs can still do so through the ongoing VDP, which imposes more favourable penalty amounts.

“Taxpayers are reminded that failure to do so may result in administrative or even criminal action being taken against them.”

A dedicated email address, HWI@sars.gov.za has been set up to manage responses from affected taxpayers and adopt a consistent approach.

Affected taxpayers who wish to make use of the ongoing VDP and taxpayers who have not yet been contacted are advised to contact the VDP Unit directly at VDP@sars.gov.za.

Simnikiweh@citizen.co.za

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