CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. New South African Penalties For Outstanding Tax Returns

New South African Penalties For Outstanding Tax Returns

by Lorys Charalambous,, Cyprus

20 October 2009

The South African Revenue Service (SARS) will introduce a system of strict new administrative penalties against non-compliant taxpayers from November 23, 2009.

In effect, taxpayers have until November 20 this year – the final deadline of the 2009 Tax Season – to submit any outstanding returns in order to avoid being penalized under the new penalty regime. The new regulations came into effect on January 1, 2009, and provide for the imposition of penalties for a range of non-compliance, including failure to register as a taxpayer, failure to inform SARS of a change of address and other personal particulars, and failure to submit tax returns and other documents to SARS.

SARS delayed the effective implementation of the new penalties to allow sufficient time for taxpayers to rectify any non-compliance and for SARS to develop its own systems to automatically detect non-compliant taxpayers, calculate applicable penalties, and issue penalty notices to such taxpayers.

The implementation and details of the new penalty regulations have been communicated and explained to professional bodies representing tax practitioners – the South African Institute for Chartered Accountants, the South African Institute for Professional Accountants, and the South African Institute of Tax Practitioners – who act as important intermediaries between taxpayers and SARS.

The new penalties will be phased in over a period of time for taxpayers with outstanding income tax returns, but, in the interest of fairness, SARS will first impose the new penalties against repeat offenders – those taxpayers who have failed to submit returns for multiple years.

It is acknowledged that the existing penalty system SARS applies has proved to be inadequate in discouraging non-compliant behavior. In 2007/08, more than 5.3m returns due to SARS were outstanding and SARS had to institute legal action against 81,000 taxpayers.

The new penalty system provides for recurring monthly penalties for each month that an income tax return remains outstanding. The penalty amounts, for the first time, will be determined according to the taxpayer’s taxable income. These amounts range from ZAR250 (USD34) a month for taxpayers with an annual taxable income of up to ZAR250,000, to ZAR16,000 a month for taxpayers with taxable income over ZAR50m. The new regulations allow for penalties to be applied each month or part thereof for up to 35 months.

To see today's news, click here.


Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »

Stay Updated

Please enter your email address to join the mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.

To manage your mailing list preferences, please click here »