Late tax refunds may be a ploy, says ombud
Ombud’s investigation reveals evidence suggesting SARS might have withheld rebates in order to meet targets
The South African Revenue Service has allegedly deliberately withheld tax refunds so it could reach its revenue target. “For the past three years, the office has consistently been flagging this problem as an emerging systemic issue,” said tax ombud Judge Bernard Ngoepe.
The South African Revenue Service (SARS) has allegedly deliberately withheld tax refunds so it could reach its revenue target.
“For the past three years, the office has consistently been flagging this problem as an emerging systemic issue,” said tax ombud Judge Bernard Ngoepe.
His office has undertaken an investigation after an escalation of complaints in 2016-17.
“The complaints about the questionable delay in refunds were so many that we had no choice but to investigate them.”
In March 2017, with Finance Minister Malusi Gigaba’s approval, Ngoepe began investigating the allegations and found sufficient evidence to suggest that refunds were deliberately being withheld.
In the report signed off by Gigaba and given to SARS commissioner Tom Moyane, the ombud concluded: “It is clear that the system allows for SARS to unduly delay the payment of verified refunds to taxpayers in certain circumstances. This has become a systemic issue. The system does not sufficiently protect taxpayers.”
The findings have been raised in various reports including an annual report to Parliament and in periodical reports to the commissioner.
Ngoepe’s report noted that some mechanisms used by SARS had justifiably given taxpayers the impression that SARS’s intention in some instances was to “avoid parting” with the money it was meant to pay out.
Ngoepe also found that in some instances the resulting financial hardship to the taxpayer had been drastic, with the delay in refunds leading to the near collapse of businesses and ensuing job losses.
Ngoepe said SARS was responsible for low tax morality. “There’s a relationship between the level of tax morality and the complaints people may feel they have against SARS. An aggrieved person is less likely to do what they’re expected to do.
“We don’t like SARS to adopt a‘ skop en donner’ attitude; we want them to treat people fairly,” Ngoepe said.
Speaking at the Tax Indaba in September, Moyane noted the findings and apologised for the “glitches”. He said the revenue service would continue to improve its systems.
Among the main findings, the report showed that complaints received by the ombud’s office had grown by 62%, from 2,133 in 2015-16, to 3,454 in 2016-17.
Most of the complaints reviewed were related to dispute resolution (39.51%), followed by refunds (24.90%) and debt (8.32%).
During the period, a total of 621 complaints were finalised and 86% of these were in favour of complainants.