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By Barbara Curson

Business journalist


Sars should be reminded of its constitutional duty

Instead of standing up for the taxpayer, its hardline stance is expunging our trust.


Sars’ customs division has published a ‘Dear external stakeholders’ notice on its website, coldly explaining that a full rebate of the customs duties as well as a value-added tax (Vat) exemption on certain critical supplies has already been granted (for which a permit has been issued).

The notice emphasises that the Draft Disaster Management Relief Bill and the Draft Disaster Management Relief Administration Bill do not provide for any extension of time relating to the period within which customs clearances must be made, nor the period within which duties due must be paid (at time of entry, or in terms of the current payment deferment arrangements?).

Sars’s action amounts to a blanket refusal. It is a waiver of its duties and obligations, and it is bluntly telling the taxpayer not to bother it with any hard luck stories, because the pre-ordained answer is ‘No’.

This also raises the question, has the commissioner applied his mind?

Can the commissioner apply his mind upfront, without knowing the particulars of the taxpayer under duress – and announce it in a notice?

Is it fair that the taxpayer has to pay customs duties and Vat on products that it cannot sell because the country is in lockdown?

As an administrative body, Sars should be acting fairly and reasonably. And in terms of Section 195 of the Constitution, it should be responding to the needs of the public.

Implication ‘problematic’

Bowmans partner Patricia Williams is of the opinion that: “In the circumstances, a blanket refusal, implying that a taxpayer has no rights in this respect, is problematic.”

Williams says the Customs and Excise Act does not have specific provisions dealing with instalment payment arrangements the way the more modern Tax Administration Act does. However, the Customs and Excise Act does not appear to prevent Sars from agreeing to accept later payment of duties. (Sars is specifically authorised to accept instalments for the payment of interest, in terms of Section 105 of the Customs and Excise Act, and this wording also implies that the instalments may cover more than just the interest amounts.)

Further, the levying of penalties and interest, and remission of penalties and interest, are both discretionary in terms of the Customs and Excise Act.

This means that Sars is indeed legally able to ‘assist’ taxpayers in the customs and excise space – and is choosing not to do so.

Williams was quite alarmed by an extract from a Sars email dated March 19: “The ramifications of Sars and South Africa not meeting its revenue targets has been widely reported in the media such as, potential junk status rating, that combined with the decreased economic outlook due to the Global Pandemic affecting our country will ultimately result in increased recessionary pressures. This demands each of us to contribute more than what we would prefer for the greater good of our country.”

The email was sent to a taxpayer, with the objective of encouraging the taxpayer to voluntarily pay a very considerable portion of a disputed tax debt, rather than apply for a full suspension in terms of the Tax Administration Act.

Williams is of the view that this extract could imply that Sars feels taxpayers should now be paying more because of the Covid-19 pandemic.

This is problematic within the actual business context, where companies are trying to preserve cash to keep their businesses afloat and minimise job losses.

Better options for pursuing revenue

The government-imposed lockdown has plunged the country into a serious financial crisis.

Many businesses are failing – and more will fail if they aren’t given any financial assistance.

If Sars had any backbone it would challenge the government on the economically damaging ban on the sale of cigarettes and alcohol. It would then be in a better position to offer payment terms to struggling businesses.

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