Tax Ombud’s request to investigate tax refund delays approved

The South African Revenue Service (Sars) has welcomed the investigation into tax refund delays and said it would fully cooperate after the Minister of Finance, Pravin Gordhan, officially gave the green light for the Tax Ombud’s proposed probe into the matter.

“Given the recent narrative about the issue of refunds, we are confident that the results of this investigation will provide the South African public with the requisite confidence in Sars’ systems,” it said on Monday.

The Tax Ombud, Judge Bernard Ngoepe, requested Gordhan to approve an investigation into the issue of tax refund delays as a systemic issue earlier in March. Some tax experts have argued that such an investigation should have been done a long time ago and have called for it to be broadened. Procedural issues also seem to be a growing concern.

Recent media reports have fuelled speculation that Sars may be withholding refunds to meet internal targets. A delay in the payment of refunds can place significant cash-flow strain on taxpayers, particularly small businesses.

Sars has maintained that tax refund delays only affect a small percentage of taxpayers.

“It is in the interest of Sars and the public to finally find closure and finality to this issue,” Sars said.

“Much of the current taxpayer complaints pertain to VAT refunds. It must [be] highlighted that Sars has an obligation to ensure both service and compliance, which includes complying with the legislation and ensuring that all incorrect activities are managed correctly, which could include fraud.”

Due to the increase in fraud, it has had to react by tightening its Risk Rules, Sars said.

“Despite such actions Sars has only referred 11% of cases for detailed audit.”

With regard to personal income tax payments, 98.2% is paid within 72 hours, it said.

During a previous interview Ngoepe said the request to investigate the issue was prompted by the number and value of complaints and the demand from taxpayers and other stakeholders.

He said the guiding principle was not to prolong any investigation and gave the assurance that the matter would be dealt with in an objective, fair and constructive manner.

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