SARS grilled on tax refund delays

Cape Town – The SA Revenue Service (SARS) has to address allegations that it delays tax refunds, offsets refunds by raising new assessments and has automatic stoppers to prevent refund payments, Parliament's standing committee on finance told a delegation led by SARS commissioner Tom Moyane on Tuesday.

"A perception has been created that in the current fiscal year SARS' performance is on the basis of withholding tax refunds. Is that correct or not? There is a perception out there that SARS has withheld tax refunds. We need clarity so we can bury the issue," Thandi Tobias-Pokolo (ANC), a member of the committee, told Moyane.

"Also, there is a perception that SARS has offset the refunds that should have taken place in the current year for future years. We need clarity if that is the case."

Yunus Carrim (ANC), chair of the committee, said one should welcome some of the achievements of SARS, but, on the other hand, "issues of race" cannot be used as a defence by SARS each time it is challenged. He explained that most people who complain to him about SARS are actually "African".

"My own view is that there is a credibility crisis regarding SARS. We have to do something about it. It is a perception issue. If it is not addressed, it becomes a reality," cautioned Carrim.

To this Moyane replied that SARS has collected more than a trillion rand - "an enormous amount".

"There is no way that we have ever in my tenure of office liked to withhold refunds in order to make up collection figures to look good," said Moyane. "Out of ethics and principles we collect only what is due to us. We are hard working."

Regarding the claim that racial allegations are used each time SARS is challenged, Moyane said "taxpayers are taxpayers and all should be treated equally and fairly".

"If we are withholding refunds in order to prop up our collection target, that would be a mammoth task. We are not stopping every refund. We explained that we have refund problems, but at the same time the risk we have is to make sure every refund is due and the taxpayer is assessed through a process. At no point during my tenure have we used refunds to meet collection targets set," said Moyane.

To this Alf Lees (DA) pointed out that the Tax Ombud had clearly shown the committee last week that there are system problems at SARS, which makes it necessary to look at the negative impact the delaying of refunds could have on businesses.

A member of the SARS delegation then explained that the agency has looked into automatic stoppers of refund payments and hopes in future it will not disadvantage honest taxpayers. At the same time, there is an increase in attempts at non-compliance by taxpayers during tough economic times like the present.

Carrim explained that there is no evidence at this stage that SARS is deliberately withholding refunds. The concern of the committee is with the negative financial effect it could have on individual taxpayers or businesses.

Adv. Eric Mkhawane, CEO of the Office of the Tax Ombud, was also present at the committee's SARS briefing on Tuesday. He explained that the Tax Ombud wanted to investigate the undue delays in the payments of refunds and found complaints were justified. The obstacles in the SARS system identified by the Tax Ombud were communicated to SARS.

"We are not talking about refunds flagged as fraudulent. We are talking about refunds already verified by SARS as due and yet payment is delayed or refunds are delayed by offsetting them by new assessments equal to the amount of the refund due. The legality around that worried us," explained Mkhawane.

"We cannot say if SARS withheld the refunds to boost revenue figures, nor can we say it did not do it for that purpose. Our investigation did not cover that aspect, since it would require a lot more interrogation. We are waiting to hear from SARS how it will deal with some of the issues we raised."

Moyane responded that SARS collaborated with the Tax Ombud when its investigation was launched.

"We interacted on the issues raised with us and are dealing with them. Some relate to our processes and systems. We have confirmed to the Tax Ombud that we accept its report and are addressing the issues raised," Moyane told the committee.

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