Clampdown on tax dodgers

Wednesday, February 17, 2010

Cape Town - Cash-based businesses that avoid making VAT payments are among those entities and individuals that government aims to target in a bid to reduce tax avoidance and tax restructuring.

Tabling his maiden Budget Speech in the National Assembly on Wednesday, Finance Minister Pravin Gordhan said these measures included tightening company car and other fringe benefits and ensuring that employer deductions were fully reflected in the gross income of employees.

He said steps would also be taken against several sophisticated tax avoidance arrangements, such as the use of transfer pricing and cross-border mismatches.

The South African Revenue Service (SARS) would use third-party information and targeted lifestyle audits to take a tougher stance against cash-based businesses who avoid VAT payments.

Gordhan said SARS would resort to "tough action" on firms who do not pay over PAYE and other taxes, even though these have been deducted from employees.

"The taxpayers of South Africa are not lenders of last resort and SARS is not a bank!" he exclaimed.

Taxpayers with defaults and who want to avoid future penalties such as interest payments on outstanding tax owed can approach the SARS which will run a voluntary disclosure programme from 1 November 2010 to 31 October 2011.

With the programme in place, the government has proposed doing away with the discretion of SARS to waive interest charged on unpaid provisional tax.