If you are someone who has been dodging or avoiding to file your tax return, keep on reading.
According to a statement released the South African Revenue Service (Sars) will now criminally prosecute taxpayers who fail to submit their tax returns.
According to Jean du Toit, Attorney at Tax Consulting SA, “The threat of a criminal record and a fine ought to serve as sufficient incentive to submit one’s return. It is perhaps worth pointing out that submission of returns also gives taxpayers access to the Voluntary Disclosure Programme (VDP), which affords acquittal from far more serious criminal sanctions.”
The following are sanctions that may be imposed on those who fail to submit tax returns:
• Criminal sanctions under the TAA
South African taxpayers are not unfamiliar with Sars’ aggressive implementation of the authority afforded to it under the Tax Administration Act 28 of 2011 (TAA) insofar as the collection taxes and the imposition of penalties are concerned
With Sars’ new initiative, taxpayers have now seen that its powers go beyond imposing monetary penalties.
Generally, failure to comply with the prescripts of the TAA amounts to a criminal offence, which is subject to a fine or to imprisonment for a period not exceeding two years.
These offences, as we have now seen, may result in a fine and a criminal record, but rarely ends with the taxpayer behind bars.
A criminal record is certainly not something to brush aside, but the TAA also makes provision for more serious sanctions where there is intent to evade tax, which can result in actual jail time for the taxpayer.
• Reprieve under the TAA – VDP
The TAA is, arguably, partisan to Sars’ cause, but it does offer non-compliant taxpayers some solace if they wish to come clean.
Sars allows taxpayers to avoid criminal prosecution and regularise their tax affairs by making a disclosure under the VDP, of which the benefits include:
• Regularise tax affairs
• Remittance of 100 per cent of understatement penalties
• Remittance of 100 per cent of administrative non-compliance penalties
• Transfer foreign funds back to South Africa ‘clean’
• Amnesty from criminal prosecution
Taking into consideration the potential ramifications non-compliant taxpayers might face, the VDP represents an appealing olive branch.
The VDP, however, comes with an important caveat, which is that taxpayers only have access if they do not have any outstanding returns. VDP applications will be discarded without further notice if the taxpayer in question has outstanding returns.
Du Toit also said, “It is worth noting that the new initiative, to close more criminal cases, does not represent a widening of Sars’ powers, as it has always had the discretion to do so. What the initiative illustrates is Sars’ no tolerance policy on outstanding returns.
Du Toit said taxpayers who are not deterred by the sanctions for not submitting returns must keep in mind that they cannot regularise other instances of non-compliance under the VDP, instances which carry far more severe sanctions.
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