SARS has announced an intensified drive to clamp down on non-compliant tax payers by intensifying criminal proceedings. There has been a significant increase in non-compliance, resulting partly in SARS not meeting revenue collection targets.

It is a criminal offence not to submit tax returns and could result in substantial fines or even criminal prosecution leading to imprisonment.
The following non-compliance penalties could be charged:

Fixed amount penalties

Fixed rate penalties can be imposed by SARS for non–compliance with any procedural or administrative action or duty imposed or requested, for example:

  • Not registering when required to
  • Not informing SARS where there is a change in registration details
  • Not filing returns
  • Not retaining records as required by SARS

Percentage based penalties 

The percentage based penalty is imposed where SARS is satisfied that the taxpayer has not paid their tax as and when required under a Tax Act. This penalty is equal to a percentage of the outstanding tax.

Understatement penalties 

The understatement penalty is a percentage applied to the shortfall of the tax. It applies to all taxes and could be charged when there is a default in rendering a return, an omission from a return, an incorrect statement in a return and, if no return is required, the failure to pay the correct amount of tax. Excluded from the understatement penalties are penalties resulting from a “bona fide inadvertent error”.

There is no doubt that SARS will be looking at all options to increase revenue collection and non-compliance is an obvious route to go. If your tax affairs are not in order, please do not hesitate to contact us for professional assistance in this regard.