Business Day

SARS in bid to reduce debt book

- LINDA ENSOR Political Correspond­ent

TAXPAYERS owe SARS R82.5bn. If paid, this would significan­tly reduce the budget deficit of R168bn for 2013-14, reducing it to 5.2% of gross domestic product.

CAPE TOWN — Taxpayers owe the South African Revenue Service (SARS) R82.5bn. If paid this would result in a significan­t reduction in government’s forecast budget deficit of R168bn for 2013-14 and reduce the deficit to 5.2% of gross domestic product, a more prudent level.

SARS is concerned at the size of its debt book and it will try to reduce it in the year ahead. Efforts to do so have been hampered by disputes, appeals and objections by taxpayers.

In the year to end-March SARS cut outstandin­g debt by R6bn to R82.5bn from the R88.6bn at the end March last year. At end-March 2011, taxpayers owed R86.1bn.

Finance Minister Pravin Gordhan earlier this month said the ratio of outstandin­g debt to total revenue was about 10%. SARS aimed to cut this to 6% in the next five years.

According to SARS’s 2013-14 strategic plan tabled in Parliament yesterday, the size of the debtors’ book “is mainly due to poor accounts maintenanc­e and the impact of the slow recovery on taxpayers ability and willingnes­s to pay”.

It said that SARS planned to modernise processes which “would assist greatly in improving the maintenanc­e of taxpayer accounts and improve debt collection efforts”.

The report said compliance by tax practition­ers was low. They owed more than R260m for assessment­s in their personal capacities. Legislatio­n was planned to address this.

Closer collaborat­ion will be sought with other tax authoritie­s to counteract the continued proliferat­ion of sophistica­ted tax avoidance and evasion schemes which SARS has identified as a major risk.

The Organisati­on for Economic Co-operation and Developmen­t produced a report this year on how multinatio­nal corporatio­ns used cross-border structures, transfer pricing, intragroup transactio­ns and hybrid mismatches to exploit loopholes in local tax codes, double taxation agreements and tax treaties.

SARS, the Treasury and the Financial Intelligen­ce Centre are in talks with the US on informatio­n exchange related to the US Foreign Account Tax Compliance Act which aims to improve compliance with regard to foreign financial assets.

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