DA welcomes the Tax Ombud investigation into refund delays by SARS

22 March 2017

The Democratic Alliance welcomes the announcement by the Tax Ombud, Judge Bernard Ngoepe, that he will conduct an investigation into systemic failures at the South African Revenue Service (SARS) that result in the reported delays in tax refunds.

These delays are across the board and include VAT, Income Tax, Employee Tax Incentives and Diesel refunds which are causing considerable financial distress to businesses, especially small businesses.

Tom Moyane, the SARS Commissioner, has repeatedly claimed, in responses to questions from the DA, that there are no problems with the various types of tax refunds and that SARS is in fact performing exceptionally well in paying refunds promptly.

This has been contradicted by the exceptionally high number of calls to the DA and to professional accounting bodies for assistance from taxpayers who state that SARS have not paid the refunds to promptly.

On the 3rd of February 2017, I wrote to Minister Gordhan to request that he use the recently enacted section 16(1)(b) of the Tax Administration Act to request the Tax Ombud conduct an investigation into systemic and process failures that result in the reported delays in large numbers of tax refunds.

What has become apparent is that SARS appears to abuse aspects of tax laws that allow for extended time for audits, document requests and other delaying tactics. This may enable SARS to artificially inflate their revenue collections and reach their targets.

The DA is of the firm belief that no money from business, especially small businesses, should be abused to assist the government’s cash flow or to assist SARS to achieve target revenue collections.

What is worse is that almost every single taxpayer who raises a complaint about SARS delays with refunds expresses great frustration that SARS simply fail to keep taxpayers informed of what they require and request the same supporting documentation over and over again.

Despite taxpayers sending documents by e-mail, via e-Filing or even hand delivering hard copies, SARS claim not to have received the documentation and then SARS places the on taxpayers.

It appears that a crisis has developed inside SARS, especially under the leadership of Commissioner Moyane, as there is a climate of low morale, divisions and weak management which is now hindering the collection of revenue.

The DA urges the Tax Ombud to work swiftly and thoroughly to investigate both systemic and process failures in order to deal with what is clearly a major concern for businesses and ultimately for economic growth and job creation.

Issued by Alf Lees, DA Shadow Deputy Minister of Finance, 22 March 2017