Refund probe under way

The South African Revenue Service (Sars) has welcomed the investigation into tax refund delays, promising full co-operation after Finance Minister Pravin Gordhan approved a tax ombud probe.

“Given the recent narrative about the issue of refunds, we are confident that the results of this investigation will provide the public with the requisite confidence in Sars’ systems,” it said.

The tax ombud, Judge Bernard Ngoepe, requested Gordhan to approve an investigation into tax refund delays as a systemic issue. Some tax experts say an investigation is overdue and they want it broadened. Procedural issues also seem to be a growing concern.

Recent media reports have fuelled speculation that Sars may be withholding refunds to meet internal targets.

A delay in the payment of refunds can place significant cashflow strain on particularly small businesses.

Sars has maintained that tax refund delays only affect a small percentage of taxpayers.

“Much of the current taxpayer complaints pertain to VAT refunds. Sars has to ensure compliance, which includes ensuring that all incorrect activities are managed correctly, which could include fraud,” Sars said.

“Sars has only referred 11% of cases for detailed audit.”

With regard to personal income tax payments, 98.2% is paid within 72 hours, it said.