Pay tax and avoid criminal sanctions
THE tax season is once again upon us and people are urged to take the time to submit their tax returns or face harsh penalties – even a criminal record.
Jean du Toit, an attorney at Tax Consulting SA, says SARS has created some nervousness in the
South African tax base by embarking on an initiative to criminally prosecute taxpayers who fail to submit their tax returns.
‘While the threat of a criminal record and a fine ought to serve as sufficient incentive to submit one’s return, it is perhaps worth pointing out that submission of returns also gives taxpayers access to the Voluntary Disclosure Programme (VDP), which affords acquittal from far more serious criminal sanctions,’ he said.
SARS’ new initiatives see their powers go beyond imposing monetary penalties.
Taxpayers’ failure to comply with the prescripts of the Tax Administration Act (TAA) amounts to a criminal offence, subject to a fine or imprisonment for a period not exceeding two years. ‘These offences, as we have now seen, may result in a fine and a criminal record, but rarely end with the taxpayer behind bars.
‘A criminal record is certainly not something to brush aside, but the TAA also makes provision for more serious sanctions where there is intent to evade tax, which can result in actual jail time for the taxpayer.’
Under the TAA, non-compliant taxpayers are offered some reprieve in the form of the VDP. The benefits of this include regularising tax affairs, remittance of 100% of both understatement penalties and administrative noncompliance penalties, transfer funds back to South Africa ‘clean’, and amnesty from criminal prosecution.
However, taxpayers have access to the VDP only if they have no outstanding tax returns.
‘It is worth noting that the new initiative, to close more criminal cases, does not represent a widening of SARS’ powers, as it has always had the discretion to do so.
‘What the initiative illustrates is SARS’ no tolerance policy on outstanding returns.’