10/11/2022
SARS has announced the phasing-in of the new system of administrative penalties for taxpayers and companies who fail to comply with their tax obligations on a monthly basis.
This is part of a project to ensure greater fairness and efficiency in the tax system.
SARS believes that it is only fair on the majority of compliant taxpayers, who meet their tax obligations and contribute towards our country’s development that SARS takes tough action against non-compliant taxpayers, especially those who have consistently failed to comply with their tax obligations.
Administrative penalties are imposed in South Africa for a specified set of prohibited practices.
These are typically the most egregious anti-competitive acts, and therefore the main purpose of administrative penalties is to act as a deterrent, both to the offending firm and to other firms that may consider engaging in similar behaviour.
With a spate of high-profile cases resulting in fines, there has been much discussion over fines and their ultimate impact on businesses and consumers.
SARS discusses three arguments that have been raised.
Firstly, SARS considers whether companies simply pass the cost of their fine through to consumers in the form of higher prices.
Secondly, SARS looks at the validity of the complaint that high fines could lead to poorer competitive outcomes due to firm exit.
Thirdly, SARS assess suggested alternative mechanisms for disbursing the fine such as paying the fine in the form of lower prices.
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