Sars welcomes investigation into VAT refunds system

16:56 (GMT+2) Mon, 20 Mar 2017

The South African Revenue Service (Sars) on Monday welcomed and pledged its full support to the investigation by the Tax Ombud into its Value Added Tax (VAT) refunds system.

This comes after Deputy Minister of Finance, Mcebisi Jonas, informed Sars that Treasury had granted the Office of the Tax Ombud permission to investigate Sars systems.

Tax ombud, Judge Bernard Ngoepe, wrote to Finance Minister Pravin Gordhan earlier this month asking permission to investigate whether systemic problems at Sars were to blame for the public complaints about the delayed payment of VAT refunds.

The Democratic Alliance (DA) had also written to Gordhan last month requesting that he use the authority given to him in Section 16 of the Tax Administration Act to request that Ngoepe conduct an investigation into the legitimacy of the claims that Sars deliberately acted to delay the refunds of VAT.

In a statement on Monday, Sars said it was confident that the results of this investigation would provide the South African public with the requisite confidence in the revenue service’s systems given the recent narrative about refunds.

“The Office of the Tax Ombud and the Ministry of Finance can be assured of full cooperation from Sars during the investigation. It is in the interest of Sars and the public to finally find closure and finality to this issue,” Sars said.

“We remain confident about the strength and ‘robustness’ of the South African Revenue Service systems and processes. In fact, Sars is determined to ensure that our systems and processes simplify the process of meeting’s one’s tax obligations.”

Many current taxpayer complaints pertain to VAT refunds.

A Mail and Guardian news report last week claimed that email correspondence suggested that Sars was possibly manipulating its numbers, a move that would artificially create the perception of a better revenue collection figure on March 31. Sars denied the allegations.

Sars said it has an obligation to ensure both service and compliance, which includes complying with the legislation and ensuring that all incorrect activities are managed correctly which could include fraud.

“Due to an increase in fraud, Sars has had to react by tightening up our Risk Rules. Despite such actions, Sars has only referred 11 percent of cases for detailed audit. Regarding Personal Income Tax, payments of 98.2 percent is paid within 72 hours,” Sars said.

“Sars looks forward to cooperating with the Tax Ombud and providing any assistance going forward.”

– African News Agency (ANA)