Corporate taxpayers frustrated with Sars over delays, aggressive penalties:
The South African Revenue Service (Sars) is under increasing pressure to improve its service and restore public trust, according to PwC’s latest Taxing Times Survey.
The 2024 report, which surveyed 206 corporate taxpayers, indicates discontent over Sars’ extended timelines, slow processing of verifications and increasingly aggressive stance on penalties.
South Africa faces a tax revenue shortfall of R22.3 billion, as announced by Finance Minister Enoch Godongwana in his medium-term budget policy statement last month.
According to the survey, verification processes with Sars have become synonymous with lengthy delays and costly uncertainty for businesses.
Despite the revenue agency’s efforts to streamline compliance, PwC’s report suggests that verification timelines continue to exceed reasonable expectations, leaving many taxpayers in a prolonged state of limbo.
The survey found that 48% of corporate income tax verifications took one to three months to complete — a timeframe that many businesses already consider excessive.
But 27% reported even longer waits of three to six months, which, while being a slight improvement from previous years, still represents a significant drain on resources and planning.
Eight percent of respondents said corporate income tax verifications endured for more than 12 months, a figure that was 3% in 2023.
Extended verifications not only impose financial burdens on businesses but also create operational uncertainty as companies wait to see if additional taxes or penalties will be imposed.
The sluggish pace of the verifications, according to PwC’s analysis, raises questions about Sars’ ability to efficiently manage its workload, despite recent restructurings and new hires.
Aggressive penalties
Adding to taxpayer frustration is Sars’ approach to penalties, specifically understatement penalties (USP), which are levied when taxpayers are found to have under-reported income.
This year, PwC introduced a new survey question on Sars’ stance toward these penalties, and the responses suggest a perception that the revenue service is increasingly punitive.
The survey shows that 44% of participants view Sars as “aggressive” in its application of USPs, while 27% consider the agency “moderately aggressive”.
The perceptions are grounded in experiences where Sars has reportedly imposed penalties based on strict or disputed interpretations of tax law, often leaving taxpayers little choice but to undertake lengthy and costly objections.
Only 24% of respondents felt the penalties were fair or “completely fair”, while 4% said penalties were based on Sars’ misunderstanding of the taxpayer’s financials.
Sars’ apparent shift toward a more punitive approach is probably a response to the agency’s ongoing battle against non-compliance, but PwC’s findings suggest the strategy is eroding taxpayer trust rather than bolstering compliance.
For businesses already managing high costs, penalties that feel punitive rather than corrective add to the perceived adversarial relationship between Sars and taxpayers.
Inconsistent adherence to service charter timelines
In 2018, Sars introduced its Service Charter, promising taxpayers transparent timelines and a reliable service experience. But six years on, most corporate taxpayers feel the promises are rarely met.
In the survey, only 3% of respondents “strongly agreed” that Sars’ service had improved, while nearly half expressed outright dissatisfaction.
Sars’ inconsistency in adhering to timelines, particularly those mandated by its own charter and the Tax Administration Act (TAA), has exacerbated taxpayer frustration.
About 61% of survey respondents either “strongly disagree” or “disagree” that Sars reliably respects these timelines — a slight improvement from prior years but still an indication that delays remain widespread.
In the additional comments section of the segment, taxpayers frequently noted the problems they face in receiving timely responses from Sars, with some saying they often had to follow up multiple times to receive even basic updates.
According to one respondent: “Sars just disregards all deadlines established in the TAA and the Service Charter with no repercussions.”
Sars’ modernisation efforts appear to have had some effect, with about 54% of taxpayers saying that compliance has become easier because of measures such as automated assessments.
While this shift aligns with Sars’ second strategic objective of simplifying tax compliance, nearly half of respondents still report compliance difficulties.
The ramifications of the Republic of Trumpistan:
Back in November 2022, after the Republicans underperformed in the midterms, I confidently declared Trump to be done. Not so fast. After all, this is the person who has survived numerous disqualifying scandals in the past.
Going into the election as a convicted felon with a track record of misogyny, xenophobia, being comfortable with support from white supremacists and his disastrous mismanagement of the Covid pandemic, who would want him back?
As far as I can tell from exit polls (which can’t be super accurate as they don’t catch all the early voters), inflation and scare stories about the border figured strongly in the Trump side of the vote. Abortion rights was a clear divider, with a big majority on either side of the issue — very opposed to abortion rights on the Trump side, very much in favour on the Kamala Harris side.
Foreign policy was not a major factor — the threat of losing Michigan by alienating the Arab-American vote over Gaza, for example, couldn’t have been a factor if you look at the numbers.
The economy, stupid — remember that? Attributed to Bill Clinton strategist James Carville, it’s about emphasising issues voters feel directly. The US economy is, in fact, one of the world’s strongest, having bounced back well from the Covid downturn. But part of that was stimulus spending that temporarily drove inflation up. Even though US inflation is now 2.4%, having peaked at 7% in 2021, some are still feeling the pain — particularly those whose wage increases did not keep up with inflation.
Why inflation matters is that it is overly simplistic to treat it as a single number — it can also accompany restructuring the economy so the inflation rate seen by some is not the same as the effect seen by others.
This means it is likely that a big weakness in the Democrats’ campaign was a failure to identify demographics who were struggling and who would not buy the message that the US economy was doing really well.
The border story is heavily amplified by repeated lies on ex-Twitter. Owner Elon Musk has taken to reposting (“retweeting”, in the old language) anything he approves of, including the highly contentious claim that there are 15 million “illegals” in the US. This figure is highly inflated by factors such as counting those stopped at the border and turned away (including multiple such encounters of the same person).
That sort of xenophobia is more powerful when economic times are hard. Even though the US economy is objectively doing well, there are enough people who aren’t for this to resonate.
Trump has no solid economic policies that will turn things around. High tariffs will increase prices. Closing the border will shut the tap for cheap farm labour.
If he rounds up huge numbers of alleged “illegals” and deports them, that could also result in many who are legally in the country being targeted — unless the US implements something like the late, not lamented, South African pass laws.
How many people in the US carry around proof of citizenship? A South African ID number includes a digit that indicates citizenship or permanent residence; the US has no national ID system. Most people use a driver’s licence as ID; you can get a non-driving version purely for ID.
These differ from state to state; not all require evidence of citizenship or residency rights. If you are in Texas, for example, which does require proof of legal residence status but you have an out-of-state ID or licence that doesn’t, how will law enforcement know if you are a citizen or not?
I foresee numerous people being unlawfully deported and the whole thing getting mired in lawsuits. While food prices soar.
Reproductive rights is obviously a big issue as many abortion-rights measures (effectively referenda) did well, including some in very Republican states such as Missouri. Strong support for this issue did not translate into votes for the Democrats.
Similarly, they failed to capitalise on angst over healthcare. In the past, Democrats have been able to use the threat of terminating Obamacare to good effect. Not this time.
At time of writing, Trump has won the presidency and control of the Senate; the House of Representatives is still up for grabs but, if wins that, he will be in a strong position to nuke Obamacare.
Obamacare is not a great plan — it was a deep compromise to attempt (in vain, as it turns out) to win Republican support. Its key strength is that it prevents denial of cover based on pre-existing conditions. Since the overwhelming majority of the US population has had Covid, that is a pre-existing condition that has unpredictable long-term consequences.
As far as the rest of the world is concerned, Trumpism presents several hazards. The obvious one is economic. If the US goes full-protectionist, it will be a major disruption of other economies.
The US car industry risks being isolated to its detriment just as the transition to electric vehicles is picking up pace. Only Tesla — run by Trump’s favourite Bond villain, Elon Musk — is well-placed to grow in this sector. If, as Trump threatens, he removes subsidies on electric vehicles, while slapping huge tariffs on imports, Tesla would have a massive advantage over its slower-paced US rivals without having to worry about up-and-coming imported rivals such as China’s BYD.
This would, however, leave the bulk of the US industry in the precarious position of selling increasingly-outdated technology that other developed countries don’t want. Or trying to catch up to Tesla without the benefit of the government subsidies Tesla has had for more than a decade.
The biggest foreign policy conundrum is Trump’s attitude that both Israeli Prime Minister Benjamin Netanyahu and Russian President Vladimir Putin can do whatever the hell they like.
This policy meets in the middle at Iran, which Trump treats as Public Enemy Number One because of Netanyahu’s antipathy to Iran and its hostility to Israel. But Iran is a Putin ally, and one of his major foreign weapons suppliers. If Israel, with Trump’s blessing, goes all in against Iran — at the moment restrained by Joe Biden’s administration — would Russia stand by and do nothing?
Ukraine is less of a conundrum; the government has for some time been aware of the risks of a Trump win and has been building their non-US supply chain. Should the US exit the picture, Ukraine will be less restrained in hitting targets deep in Russia. As with the status quo, much depends on Russia’s capacity to continue a war of attrition with massive losses.
The final mystery is why some believe that Gaza is better off without Biden or Harris in charge. True, the Biden administration has not paid attention to solid evidence of genocidal intent and action by Israel. But they at least have some capacity to be embarrassed by Israeli excesses. Trump has no such constraints.
Over the campaign, Trump has shown signs of cognitive decline. Whether this will be a factor in his presidency will be interesting, if a bit scary. Will he have “guardrails” in the form of a cabinet who will control his worst impulses as he did before? It seems unlikely as he has now had time to work out what sort of people he wants around him.
The one member of his cabinet he can’t fire is his vice-president. That will be JD Vance, a person who has completely reversed many positions to win Trump’s favour. Exactly what the dynamic between them will be in government is hard to predict.
In short, this is a bleak time for US civil and human rights; internationally for Palestine even more bleak, a little less bleak for Ukraine and unnervingly uncertain for the rest of us.
Philip Machanick is an emeritus associate professor of computer science at Rhodes University and a Makana Citizens Front councillor.
ANC intensifies renewal drive as it fights to win back KwaZulu-Natal:
The ANC in KwaZulu-Natal has vowed to regain the support it lost to former president Jacob Zuma’s uMkhonto weSizwe party (MK party) in the May general election.
The party is on a bid to rebuilding its branches in the province, which it acknowledges were weak and contributed to the organisation losing over 50% of its support.
In recent weeks, members of an ANC team tasked with rebuilding KZN branches through political education has been travelling across the province.
Led by head of presidency Sibongile Besani, the team includes party veterans such as former KZN premier Sibusiso Ndebele and former ANC provincial deputy chairperson Mike Mabuyakhulu.
ANC provincial chairperson Siboniso Duma, who, along with his ANC KZN leadership team, recently met president Cyril Ramaphosa to discuss the organisation’s renewal programme, said the effort to rebuild branches in KZN was showing progress.
“We are focusing on cadreship and ideological development because we understand that some cadres may have strayed from the foundational values of the ANC. We are replacing individual interests with a greater interest in the collective goals of the movement.”
Statistics from the Electoral Commission of South Africa (IEC) showed that a significant number of ANC supporters in Msunduzi and eThekwini voted for the MK Party in the May election.
Duma said the meeting between the ANC provincial leadership and Ramaphosa resolved that the party should intensify its renewal efforts in Msunduzi, which falls under the organisation’s Moses Mabhida region.
As part of this effort, Duma will deliver the party’s renewal lecture at the Pietermaritzburg City Hall on Sunday.
The efforts come amid calls from some senior ANC leaders for the removal of Duma and the current provincial executive committee (PEC).
Some members of the ANC national working committee (NWC), which recently completed an assessment of KZN’s performance, suggested that the PEC be replaced.
The party’s national executive committee (NEC) is yet to decide on the PEC’s future.
There have been rumours that some ANC leaders wanted the team, which includes Besani, Ndebele and Mabuyakhulu, to assume the PEC’s responsibilities, but ANC provincial spokesperson Mafika Mndebele dismissed these.
“What some people don’t understand is that those comrades were brought in by the PEC, not by the national leadership. The members of the team have been given a specific task; they are not part of the PEC.”
This article was first published by The Witness.
Submit and get free exposure here: Showcase Your Business | Advertise Your Special Offers.
