South Africa has a huge tax debt of roughly R513-billion that taxpayers owe, according to Johnston Makhubu, the deputy commissioner of the South African Revenue Service (SARS).
Speaking at the Radisson Hotel OR Tambo on Monday for the 12th Annual Tax Indaba, Makhubu likened the situation to a company balance sheet and claimed that a shareholder would be shocked.
He said the amount would raise questions about how the entity aims to leverage that balance sheet and how much of it will be written off.
Makhubu said SARS has not had substantial write-offs in its debt book over the years. However, even with some write-offs, he said SARS believes there is still hope that they may leverage it.
“You would have seen us last year starting to charge VAT [value-added tax] on low-value goods coming through e-commerce. And we have done away with the flat rate of 20% on goods that are coming in,” said Makhubu.
Makhubu also raised several challenges faced by SARS and other tax administrations globally, including digitalisation and artificial intelligence, an aging workforce, the loss of institutional memory, growing tax debt, and the acceleration of e-commerce.
Cross-border tax challenges
Other challenges include the untapped tax gap, underfunding and investment into administrative capability, and the proliferation of cross-border tax and financial crime, which is a global challenge.
On financial crime, he said South Africa faced the same challenges as other countries.
“The proliferation of cross-border tax and financial crime is a global challenge, and we think we are not unique in South Africa,” said Makhubu.
“We’ve been open about cases we’ve faced in the tobacco industry and those enabled by some in the financial services sector. And we think that that is a tip of an iceberg.”
Makhubu stated that SARS is enhancing its efforts in this field and acknowledged that underfunding had been a problem but said there had been progress.
He said they believe SARS has made some progress and expressed gratitude to the minister for the extra R7.5-billion allocated, which they expect to use to help strengthen and advance planned interventions.
