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IOL News
05-06-2025
- Business
- IOL News
Sars launches Project AmaBillions: expect a surge in VAT audits
Discover how Sars' new initiative, Project AmaBillions, is set to increase VAT audits significantly, impacting businesses across South Africa. Learn what steps you can take to ensure compliance and avoid penalties Image: Ziphozonke Lushaba / Independent Newspapers According to recent media reports, Sars has launched a new initiative — Project AmaBillions — as part of its broader strategy to boost revenue collection by an additional R70 billion over the next three years. To support this objective, Sars has reportedly already recruited 500 new staff members, with an additional 1,000 to 1,500 appointments anticipated. While this expanded capacity will enhance Sars' ability to collect, across multiple tax types, Value-Added Tax (VAT) remains an easy target, with a notable increase in VAT-related audits, verifications, and additional assessments already being observed. In this evolving compliance landscape, businesses, particularly those operating in complex or high-risk sectors, are encouraged to revisit their VAT positions and ensure that both legal interpretation and supporting documentation are up to standard. VAT as an Easy Win for Sars The government's recent proposal to raise the VAT rate met significant public resistance and was ultimately shelved. However, the fiscal demands that prompted the proposal remain unchanged. In the absence of a rate increase, an easy target is the enhanced enforcement of existing VAT obligations as a more immediate mechanism to protect the tax base. Given the transactional nature and extensive reach of VAT, it remains one of the most active areas of Sars enforcement, and from a tax collection standpoint, is second only to Personal Income Tax, per Sars' Revenue Announcement for the 2024/25 Financial Year: Except from the 2024/25 Revenue Announcement presentation: Recent trends confirm an increase in audit activity, particularly where VAT positions rely on complex interpretation or are not fully substantiated by documentation. Certain areas are particularly at risk: Input tax deductions , where Sars may challenge the deductibility based on the nature of the underlying expense, its link to taxable supplies, or the quality of supporting invoices; Zero-rated supplies , especially exports, where documentary proof and timing requirements are closely examined; and Apportionment calculations , in cases where businesses make both taxable and exempt supplies, and Sars queries the method used to determine the deductible portion of input VAT. In addition to heightened audit activity, input tax deductions have become increasingly the subject of legal proceedings, with courts being asked to assess whether deductions meet the requirements of the VAT Act. Often, the success or failure of a claim rests both on the commercial reality of the transaction and on whether the taxpayer can demonstrate compliance with the relevant documentary and legal criteria. Discharging the burden of proof As a self-assessment system, VAT places the burden of proof squarely on the taxpayer. Sars does not need to prove a taxpayer is incorrect; rather, it is the taxpayer who must prove that the tax position adopted is correct. Documentary shortcomings that can result in adverse audit findings may include: Incomplete or non-compliant tax invoices; Missing or outdated export documentation; Contracts or agreements that do not support the VAT treatment applied; and A lack of internal policies governing apportionment or exempt supply treatment. Even businesses with reputable systems or historic Sars engagements should not assume automatic compliance. Audit readiness requires continuous alignment with Sars' current expectations and the evolving interpretation of the VAT Act. High-risk for high reward: which businesses are most scrutinised? While all VAT-registered vendors are subject to review, recent enforcement trends suggest that the following types of businesses may be more susceptible to VAT scrutiny, especially in light of the looming 'Project AmaBillions': Exporters of goods and services , particularly where zero-rating is applied; Foreign suppliers of electronic or remote services to South African recipients; Property developers and investors , due to the complexity of VAT on construction, disposals, and mixed-use properties; and Enterprises with substantial input tax deductions or recurring VAT refunds . In these cases, a proactive review of VAT compliance and risk report may assist in identifying and addressing potential exposure, before they are raised by Sars. A Coordinated Tax Debt Collection Strategy 'Project AmaBillions' is more than a revenue slogan — it reflects a deliberate shift by Sars toward coordinated and data-driven enforcement, leading to increased tax revenue collections. This includes the use of Artificial Intelligence tools, targeted audit selection based on risk modelling, and specialised teams focused on high-yield areas such as VAT, High-Net-Worth taxpayers, and Cryptocurrency. With the recruitment of up to 1,500 additional staff, Sars is positioned to expand its enforcement reach significantly over the coming months. Proactive compliance is key While increased audit activity may place pressure on internal finance and tax teams, early intervention and strategic review can help businesses avoid prolonged disputes or unintended liabilities. A targeted VAT review can assist in confirming that: Zero-rated supplies are supported by adequate and compliant documentation; Input tax deductions meet all legal and documentary requirements; Invoicing and contractual frameworks comply with SARS standards; and Internal VAT procedures, including apportionment and record-keeping, are robus t. Early action prevents future exposure Where there is uncertainty around VAT treatment, and businesses find themselves in a potentially precarious position of now facing Sars scrutiny, the best practice is to seek the assistance of a tax professional, ensuring the best compliance strategy is followed. Early assessment can help prevent future challenges, reduce the risk of penalties and interest, and ensure Sars readiness in an increasingly vigilant digitized environment.
IOL News
03-06-2025
- Business
- IOL News
SARS aims for R20 billion through strategic revenue enhancement initiatives
SARS has taken valuable lessons from the 2024/25 debt-collection drive. Image: Ziphozonke Lushaba / Independent Newspapers The South African Revenue Service (SARS) is determined to tackle the pressing financial challenges facing the nation, affirming its commitment to serve with integrity and efficiency. As a critical entity in collecting revenues that fund essential public services, SARS has announced an ambitious goal of raising a minimum of R20 billion in revenue through strategic enhancements and technical innovations. With valuable lessons learned from the 2024/25 debt-collection drive still fresh, SARS is refining its operations to ensure that its revised revenue estimates are met this year. Paramount among these efforts is the use of advanced data analytics and artificial intelligence, tools that are revolutionising how the agency detects tax compliance risks and combats tax evasion. By integrating expansive third-party data sources such as banking and payroll information, SARS is automating tax assessments and more accurately identifying underreported income. This sophisticated approach aims not only to strengthen compliance rates but also to close the persistent tax gap that has long plagued the South African economy. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading Furthermore, SARS is intensifying its fight against the illicit economy, particularly in sectors that generate significant revenue, such as tobacco, alcohol, and fuel. Through enhanced enforcement measures targeting smuggling, counterfeit goods, and black-market transactions, SARS seeks to recover substantial revenue losses while simultaneously deterring future non-compliance in the informal economy. Another critical initiative involves broadening the tax base. SARS is systematically identifying and registering individuals and businesses that have previously operated outside the formal tax system. By focusing on hard-to-tax sectors—specifically small enterprises and self-employed individuals—SARS is actively mobilising increased revenue and lessening reliance on a narrow tax base. SARS Commissioner Edward Kieswetter Image: Timothy Bernard / Independent Newspapers
IOL News
31-05-2025
- Business
- IOL News
Point of view: understanding the impact of eFiling fraud on South African taxpayers
Discover the troubling findings of the Tax Ombud's eFiling Profile Hijacking survey, revealing the extent of fraud affecting South African taxpayers and the urgent need for improved security measures. Image: Ziphozonke Lushaba / Independent Newspapers The latest findings from the Tax Ombud's eFiling Profile Hijacking survey paint a stark picture of the vulnerabilities within South Africa's tax system. The Tax Ombud, Yanga Mputa, presented these findings this week. The numbers alone tell a worrying story: nearly half of the respondents were registered tax practitioners, while a significant portion, 32.7%, were individual taxpayers. The hijacking of tax profiles is not a minor inconvenience; it is a direct assault on the integrity of Sars, the security of taxpayers, and the trust that businesses and individuals place in the tax system. Alarmingly, a significant portion of those surveyed had firsthand experience with eFiling hijacking, with 41% reporting that they encountered this form of fraud. Meanwhile, 38% of tax practitioners had clients who fell victim to it, and 21% had witnessed it happening to someone else. These figures highlight that this is not a niche issue affecting a handful of unlucky taxpayers—it is widespread and systemic. The types of tax affected provide further insight into the nature of these attacks. Personal Income Tax was the primary target, making up 65% of reported cases, followed by VAT at 20% and Company Income Tax at 15%. This underscores the fact that individuals, rather than corporations, bear the brunt of eFiling fraud. The financial implications are severe: fraud amounts ranged from sums below R10 000 to staggering figures exceeding R1 million. For many victims, this is not just a bureaucratic headache, it is financial devastation. What is even more concerning is the response-or lack thereof—from authorities. More than half (52%) of the respondents did not report the matter to the police, and an additional 23% did not even know if they should. This raises critical questions about law enforcement's ability to assist victims and deter perpetrators. Even among those who did report their cases, the question remains: What action, if any, was taken? The survey further reveals the enabling factors behind these fraudulent activities: internal fraud and insider involvement, a lack of cybersecurity safeguards, system vulnerabilities, and ineffective response mechanisms from Sars itself. The fraudulent modification of banking details adds another layer to the crisis, demonstrating how easily financial data can be exploited. There is an urgent need for improved security measures and greater education and awareness of the risks. Sars, the institution tasked with protecting taxpayers, does not emerge unscathed from this report. While 71% of respondents attempted to report their cases to Sars, only 11% found the response to be effective. A staggering 89% of those affected indicated that Sars' intervention did little to resolve the issue. The failures range from a lack of communication and responsiveness to inefficiency and delays. Improved security measures, more thorough investigations, and a strengthened customer support framework should be the starting point. The most damning statistic of all is the assessment of Sars' communication and interaction following the discovery of fraud: 82% of respondents found it inadequate and ineffective. The victims of eFiling hijacking deserve better, swift action, transparency, and assurance that their financial records are secure. The findings of the survey make it clear: eFiling hijacking is a pressing issue that demands immediate attention. Addressing this challenge effectively is crucial to maintaining confidence in the tax system and ensuring taxpayers feel secure. Sars has an opportunity to strengthen its processes, enhance its responsiveness, and implement robust measures that protect individuals and businesses alike. By taking decisive action, it can reaffirm public trust and demonstrate its commitment to safeguarding taxpayer information. A proactive and transparent approach will go a long way in preventing further exploitation and ensuring the integrity of the system. * Maleke is the editor of Personal Finance PERSONAL FINANCE
IOL News
22-05-2025
- Business
- IOL News
Trial resumes: High-profile tax fraud case tied to SAPS corruption scandal
SARS officials take the stand in the R19 million tax fraud trial linked to the SAPS 'blue lights' case. Image: Ziphozonke Lushaba / Independent Newspapers The Palm Ridge Magistrates' Court has adjourned the high-profile tax fraud trial involving Vimpie Phineas Manthata, his company Instrumentation for Traffic Law Enforcement, and a co-accused, Judy Rose, to Thursday. The case, which is closely watched due to its links to the infamous 'blue lights' SAPS corruption scandal, resumed this week with explosive testimony from officials of the South African Revenue Service (SARS). Manthata and Rose are facing charges of fraud and contravention of the Tax Administration Act, stemming from alleged irregularities during the 2018/2019 tax assessment period involving an estimated R19 million. Rose, employed as a bookkeeper at the company, is accused of being a direct accomplice. According to the Investigating Directorate's spokesperson, Henry Mamothame, the state opened its case on Monday with testimony from a senior SARS official. 'The second witness from SARS took the stand prior to the adjournment and is expected back in court to be cross-examined by the defence attorney,' said Mamothame. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ In addition to the tax-related charges, the accused are also implicated in a separate corruption case involving an alleged irregular R191 million contracts awarded by the South African Police Service. Mamothame confirmed that both Manthata and Rose are currently out on R10 000 bail each. 'The court warned them to be back when the trial resumes,' he added. The trial continues Thursday, where further cross-examinations and state witnesses are expected to shed more light on both the financial misconduct and its connection to the broader SAPS corruption saga. IOL News Get your news on the go, click here to join the IOL News WhatsApp channel.
IOL News
21-05-2025
- Business
- IOL News
South Africa's budget 3. 0: A year of fiscal upheaval and strategic changes
As the months slip into May, the fiscal landscape continues to evolve, presenting both challenges and opportunities for the economy. Image: Ziphozonke Lushaba / Independent Newspapers In a financial milieu punctuated by unexpected shifts, South Africa's Finance Minister, Enoch Godongwana, unveiled his third National Budget for the fiscal year, titled Budget 3.0. The intricate journey to this point has been nothing short of extraordinary, marked by the postponement of the first budget and the withdrawal of the second due to legal wrangles. As the months slip into May, the fiscal landscape continues to evolve, presenting both challenges and opportunities for the economy. Joubert Botha, Head of the Tax and Legal practice at KPMG in Southern Africa, offered insights into the key elements of this revised budget, focusing on the implications for taxpayers and the broader economic framework. 'This year's budget has been marked by a comprehensive reevaluation of tax revenue projections," Botha said, reflecting on the substantial R61.9 billion downward revision of anticipated revenues. This significant adjustment signals the government's cautious approach amid ongoing economic uncertainty. One of the most discussed aspects of Budget 3.0 was the decision to forego an increase in Value Added Tax (VAT) that had stirred controversy in public discourse. Botha said that there would be no expansion of the zero-rated basket nor any hike in VAT rates. Instead, the budget placed emphasis on an inflationary increase in the fuel levy, a move set to stimulate various facets of fiscal support. Moreover, amid the fiscal recalibrations, the government has allocated R7.5 billion in funding to the South African Revenue Authority (SARS). This infusion of resources aims to enhance tax collection efforts, with projections of raising an additional R20 to R50 billion. The strategic focus on modernisation of SARS is set to bolster efficiency, ensuring the institution can adeptly tackle its collections mandate in an ever-evolving economic landscape. Notably, Budget 3.0 does not accommodate inflationary adjustments to personal income tax brackets or medical tax credits, a feature that many taxpayers will keenly feel, particularly as inflation continues to challenge household budgets. In contrast, adjustments to excise duties on alcohol and tobacco have been made, symbolising the government's stance on ensuring that certain sectors contribute fairly within the tax framework. As the budgetary processes unfolds, there is an anticipation of new tax measures to be proposed in the upcoming disbursements. Botha elucidated that further adjustments in the budget could herald innovative approaches to stimulate growth and address national priorities more effectively. "In summary, South Africa's Budget 3.0 encapsulates the narrative of a nation grappling with economic challenges while attempting to chart a strategic path forward. The absence of immediate VAT increases, alongside targeted funding for SARS and moderated adjustments in other tax areas, creates a complex but compelling fiscal tapestry as the country endeavours to stabilise and grow its economy amid numerous headwinds," Botha said. BUSINESS REPORT Visit:
