The South African Revenue Services. File picture: Ziphozonke Lushaba, Independent Media
JOHANNESBURG - The SA Revenue Service (Sars) has set its sights on businesses withholding VAT and PAYE to recover a revenue shortfall it says is a result of deteriorating compliance with the country's tax laws.

Acting Sars commissioner Mark Kingon said the revenue service had experienced falling compliance in outstanding returns across all taxes.

Kingon said Sars was more concerned about the growing tendency of companies to withhold VAT and PAYE.

“The Sars outstanding returns campaign will be boosted this year to bring this matter under control,” Kingon said. “Sars is also collaborating with the Department of Justice to expedite the prosecution of tax offences.”

Yesterday, Sars said it had collected R700million less in taxes in the 2017/18 financial year than its February revised target.

Sars said its preliminary figures showed that it only managed to collect R1.216trillion during the period - less than the R1.217trln the National Treasury announced as a target during the February Budget speech.

However, the preliminary figures remained R72.4bn higher compared to the 2016/17 financial year.

Ian Cruickshanks said it was unfortunate if companies withheld VAT and PAYE payments to Sars.

“It might be an expression of companies' discomfort with the government, but it nevertheless is a serious offence and I would be surprised if companies are behaving in such a manner,” Cruickshanks said.

The revenue services said personal income tax and VAT accounted for a combined R760.3bn of collections during the period at 62.5percent.

Company income tax fetched R220.2bn and customs raked in R49.4bn.

Finance Minister Nhlanhla Nene said the improved business confidence was yet to translate into higher employment numbers and significant growth in the wage bill.

“As a result, PAYE, the largest contributor to the Sars tax portfolio, came in at 8.6percent, significantly below the 9.2percent levels experienced in the past two years,” Nene said.

Sars said between December 2017 and February 2018, monthly revenue growth rates accelerated between 9.5percent and 15.5percent.

Nene attributed this to improved business confidence, strengthening of commodity prices, improved Purchasing Managers’ Index and the stronger currency towards the latter part of 2017.

Bernard Sacks, tax partner at Mazars, said while the R700m shortfall seemed modest, the target was only revised just over a month ago.

“Because the overall outcome was a shortfall of approximately R700m, it would appear that other taxes fell short of the revised estimates by R3.4bn,” Sacks said.

Sars has faced a torrid few years which have led to an exodus of skills and a tarnished credibility. President Cyril Ramaphosa last month suspended commissioner Tom Moyane, pending a disciplinary hearing.

The revenue service revealed in Parliament in December that it had lost 506 employees since the start of the year with a combined experience of nearly 7500 years. Kingon said arresting a loss of skills at the revenue services would be top of his priorities as well as restoring the credibility of Sars.

“We will always find an exodus of skills happening, but we need to find a better way in dealing with the loss of skills and in empowering our staff to deal with challenges they face when collecting taxes,” Kingon said.

- BUSINESS REPORT