Latest news with #R513
The Citizen
2 days ago
- Business
- The Citizen
Sars to get tougher as it chases R513 billion in unpaid tax
If the taxman scares you, you better run. He is on a mission to find almost half a trillion rand and will be tougher and more efficient. Taxpayers can expect Sars to use tougher enforcement and tech-driven strategies as it ramps up its recovery efforts to collect a staggering R513 billion in unpaid taxes, a record figure that raises questions about the country's fiscal health. Geo Kilian, tax attorney at Hobbs Sinclair Advisory, says the size and growth of this debt underscore the pressing need for stronger enforcement as well as taxpayer cooperation. 'A tax debt of this magnitude is not just a number on a balance sheet but a direct threat to public finances and the delivery of essential services. When over half a trillion rand is outstanding, Sars has no choice but to act decisively.' Sars' deputy commissioner Johnstone Makhubu disclosed the amount at the 12th Annual Tax Indaba in Johannesburg and said that this was a large increase from around R415 billion last year. The primary culprits are VAT and PAYE (Pay as you earn), 'trust monies' that businesses and employers collect on behalf of Sars, along with interest and penalties that can escalate significantly in cases of suspected fraud. 'VAT and PAYE are not optional extras. These are amounts collected in trust. When they are withheld or misappropriated, it crosses into a very serious compliance breach that Sars will pursue aggressively.' ALSO READ: AI powers Sars efficiencies, says Kieswetter at G20 Zimbali meet Sars will escalate enforcement and outsource recovery Killian says this will mean escalating enforcement and outsourcing recovery. 'Sars's multi-pronged plan blends traditional methods with new approaches. Portions of complex and aged debts are outsourced to around 15 external collection agencies, while internal teams focus on high-impact recoveries. 'Sars is also intensifying legal action, moving from third-party appointments to civil judgments, writs of execution and where necessary, personal liability claims against directors. 'We see a definite shift in tone. Sars is moving away from leniency towards a far more assertive posture. If you deliberately avoid your obligations, expect to face judgments, asset seizures and personal liability.' However, the taxman still offers relief options for taxpayers in genuine distress, including compromises under Section 200 of the Tax Administration Act and structured deferrals, Killian points out. 'The door is open for taxpayers acting in good faith. If you can show hardship, there are legal mechanisms to restructure or reduce your debt. But you have to talk to Sars as ignoring the problem will only make it worse.' ALSO READ: Pressure on Sars to prevent tax increases in 2026 Taxman not expected to write off too much of R513 billion debt Killian says while some debts are ultimately unrecoverable, such as those from liquidated companies, fraudulent entities, or deceased individuals, Sars is cautious about excessive write-offs. 'There is a fine balance. Write off too much and you risk encouraging default as a strategic choice. That is why Sars is exhausting legal remedies first, even in hard-to-collect cases.' Fortunately, Sars can turn to tech to fill South Africa's tax gap. Killian says Sars is also betting on technology to curb future debt accumulation. 'Investments in AI and data analytics allow Sars to cross-reference filings and bank data in real time, identifying discrepancies without prior notice. New VAT rules for low-value e-commerce imports will also ensure that digital and cross-border transactions contribute their fair share.' He points out that Sars is no longer just a reactive tax collector. 'With AI-driven insights, Sars is moving towards proactive detection. That's a game-changer for compliance.' ALSO READ: Sars boss speaks out against tax hikes – again Economic pressure and stalling tactics in court Recovering even part of the R513 billion would significantly strengthen the fiscus, but challenges remain: from economic pressures and 'Stalingrad' tactics during litigation to administrative delays, Killian says. 'Compliance is ultimately a partnership between the state and taxpayers. Sars can enforce and innovate, but long-term stability depends on a culture of voluntary compliance. That is the real prize.'
IOL News
11-08-2025
- Business
- IOL News
Taxpayers owe SARS over R500 billion, warns Deputy Commissioner Johnstone Makhubu
The South African Revenue Service says taxpayers now owe the government just over R513 billion in unpaid taxes. Image: Freepik The South African Revenue Service (SARS) says taxpayers now owe the government just over R513 billion in unpaid taxes. The figure was revealed by Deputy Commissioner Johnstone Makhubu, who was speaking at the 12th annual Tax Indaba on Monday. Makhubu also warned that the ballooning tax debt poses a major concern for the fiscus but also presents opportunities for improved recovery and enforcement. "I think the growing tax debt we are sitting with around, as at the end of the financial year last year, we are sitting at around R513 billion of monies that are owed to the fiscus by taxpayers,' Makhubu said. 'And again, if you are sitting with a balance sheet like that, any shareholder will ask you: what are you doing to leverage that balance sheet? And how much of that balance sheet should you be writing off?' IOL previously reported that the revenue service announced its intention to use artificial intelligence (AI) and data analytics to help achieve the revised revenue target of R1.986 trillion in taxes for the 2025/26 financial year set by Finance Minister Enoch Godongwana earlier this year. Godongwana allocated R7.5 billion over the next three years to enhance SARS's revenue collection capabilities and modernise its systems. Makhubu added that the revenue service has not had substantial write-offs of tax debt in the past, but acknowledged that some level of write-offs may be necessary. "SARS has, over the years, not had substantial write-offs of its debt book. However, I think even if we allowed for some substantial write-offs of the debt book, we are of the view that there is still an opportunity in there, like our colleagues are telling us globally, that we can be able to leverage that". He also addressed challenges related to the rapid growth of e-commerce, adding that SARS began charging VAT on low-value goods imported through e-commerce platforms last year.
The Citizen
27-05-2025
- Business
- The Citizen
Here's how many millions SA sends to Lesotho each month for water
Meanwhile, Lesotho has a pretty hefty VAT bill. South Africa pays approximately R230 million monthly in royalties to Lesotho for water from the Lesotho Highlands Water Project, while Lesotho owes R513 million in outstanding value-added tax (VAT) refunds as of February 2024. These monthly payments drop to around R120 million during periods when water delivery is disrupted. According to a briefing on Tuesday by the Department of Water and Sanitation to the portfolio committee on Water and Sanitation, the royalty structure operates on a 56-44% split favouring Lesotho. Teboho Nkhahle, South African Chief Delegate to the Lesotho Highlands Water Commission, confirmed South Africa 'started paying the revised royalties in January 2024' following recalculations using updated methodologies. 'We are currently paying around R230 million a month. But in the last six months, because there was no water being delivered and no electricity being generated, we're paying around R120 million a month.' The current treaty includes a 12-year review cycle for royalty rates. Committee members called for external auditing by the Auditor General of South Africa to provide more rigorous oversight. South Africa's Water and Sanitation Deputy Minister David Mahlobo indicated willingness to explore such arrangements, stating: 'We will mandate our teams that we should find modalities… that are more credible on ensuring that even that institution is on the other side.' The R513 million VAT debt represents outstanding VAT refunds that Lesotho owes to South Africa. Nkhahle confirmed that diplomatic efforts are underway to resolve these financial obligations. Lesotho Highlands Water Project costs escalate to R53.3 billion The second phase of the Lesotho Highlands Water Project will deliver an additional 490 million cubic meters of water annually to South Africa, supplementing 780 million cubic meters from Phase One. The water primarily serves Gauteng province. The project operates under the 1986 treaty between South Africa and Lesotho, with oversight from the Lesotho Highlands Water Commission, comprising six commissioners from each country. Mahlobo confirmed that the project remains on track for commissioning by 2029, despite recent setbacks, including contractor suspensions due to negligence and concerns over pollution. 'The project is proceeding,' Mahlobo stated, emphasising that different work packages continue simultaneously even when specific components face delays. The project's budget has escalated significantly from its original estimates, with current projections at R53.3 billion. Originally estimated to cost R42.06 billion, the project escalated to R53.3 billion. Mahlobo reaffirmed that water delivery is expected by August 2028, with completion scheduled for September 2028. Construction progress has reached 77% for major components. Nkahle explained that the R53.3 billion long-term cost plan already includes R6.2 billion in contingencies. 'This escalation and contingencies [are ]already built into this long-term cost plan, and also furthermore, each contract also has built in contingency,' Nkhahle said. ALSO READ: Completion date for R53 billion Lesotho Highlands Water Project postponed again Lesotho Highlands Water Project financial structure Committee members expressed concern about the impact on water tariffs and the need for transparency in cost management. 'All of us who are very worried, very worried around the issues of cost escalation, some of the cost escalation is because of the issues of contingencies,' Mahlobo acknowledged during the briefing. South Africa bears all cost-related payments through the Trans-Caledon Tunnel Authority (TCTA), which borrows from markets and recovers costs through water tariffs. Water tariffs have been negotiated with end users, such as Randwater, 'over CPI' to account for escalating costs. The funding strategy incorporates long-term loans to prevent sharp tariff increases. Additionally, 33% of project costs are allocated to acid mine drainage treatment, a decision made to protect the quality of water being transferred from Lesotho. Percy Sechemane, TCTA CEO, confirmed the funding arrangements where South Africa receives 'the enduring benefit of water transfer.' ALSO READ: Full Vaal Dam to the rescue as Lesotho Highlands Water Project takes bad turn Contractor suspension and pollution issues A major contractor was temporarily suspended due to negligence, specifically related to pollution in the construction area. The suspension was triggered by environmental concerns affecting water quality in the Katse Dam reservoir. 'The contractor was indeed actually suspended. That's the report we got,' Mahlobo confirmed, adding that the minister had to intervene after the matter became public through media reports. Nkhahle confirmed that 'that suspension has been lifted and the 1,300 workers who were temporarily laid off resumed work this morning.' The engineer accepted interim measures implemented by contractors, along with a comprehensive remedial plan to address environmental concerns. Nkhahle clarified that the pollution was 'localised and insignificant due to the size of the effluent that was running into the reservoir in relation to the total volume of the reservoir.' However, he noted it was significant from a construction monitoring perspective. ALSO READ: Gauteng residents warned to brace for major water disruptions this week Treaty review and financial management The current treaty includes a 12-year review cycle for royalty rates, but committee members questioned why reviews don't occur annually to match maintenance and operational cost variations. Percy Sechemane, CEO of the TCTA, explained that the lengthy review period provides stability for funders. 'The treaty itself is an instrument that a lot of thought went into from both South Africa and Lesotho,' he said, noting that frequent changes would make financiers uncomfortable about their investments. Sechemane also confirmed that water tariffs have already been negotiated with end users like Randwater to account for the escalated costs, with increases 'over CPI on the South African side so that we can close that gap.' Lesotho Highlands young professionals' programme The Lesotho Highlands Development Authority's Young Professionals Programme currently has 60 graduates. However, only five are from South Africa despite 39 being offered opportunities. According to project officials, South African graduates declined participation due to low stipends and challenging working conditions in the mountains. NOW READ: Municipal water crisis 'nothing to do with bulk water supply', says minster at LHWP reopening
