Category Archives: SARS

South African Revenue Services

16 April 2018 – SARS, NPA to prosecute taxpayers for outstanding returns

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PRETORIA, 16 April 2018 – The South African Revenue Service (SARS) has embarked on a new initiative with the National Prosecuting Authority (NPA) to prosecute non-compliant taxpayers, including prominent South Africans, who have failed to submit returns.

Taxpayers who are found guilty will end up with a criminal record.

The initiative has already seen its first conviction in Port Shepstone last week. Mr S Ragunat, as the representative of SPS Distributors, paid an admission of guilt fine of R5 600 in the Port Shepstone Regional Court for non-submission of more than 50 outstanding Value-Added Tax (VAT), Pay-As-You-Earn, (PAYE) and Corporate Income Tax (CIT) returns. He was ordered to and has submitted all the outstanding returns.

Failure to submit a tax or VAT return is a criminal offence in terms of the Tax Administration Act and Value-Added Tax legislation.

During the week of 16 to 20 April, eight outstanding return cases involving hundreds of outstanding returns will appear on court rolls in different parts of the country – including four cases in the Johannesburg Magistrate’s Court on 19 and 20 April.

There will also be cases in Ficksburg and Bothaville in the Free State, as well as the Newcastle Magistrate’s Court in KwaZulu-Natal during the rest of the week.

The campaign marks an intensification of SARS’s Outstanding Returns Project that was launched towards the end of last year when SARS aimed to raise awareness amongst taxpayers about outstanding tax returns.

SARS has over the past few years experienced an unacceptable increase in the non-submission of returns across all tax types, including PAYE, VAT, corporate income and personal income tax.

At the end of March 2018, SARS’s Outstanding Returns Book showed that active taxpayers owed SARS approximately 30 million returns, in many cases showing that multiple outstanding returns were due by a single taxpayer. 

The decision to resort to enforcement of compliance through criminal prosecution is a last resort. All the taxpayers that will appear in court were engaged beforehand and final demands were issued them before the criminal cases commenced. At this stage 36 dockets have been handed over to the NPA.

The significant drop in the submission of returns was one of the key indicators pointing to decreased compliance and was highlighted by Finance Minister Nhlanhla Nene during the announcement of the tax revenue collection figures for the 2017/2018 financial year.

13 April 2018 – Drugs valued at over R30 million bust at OR Tambo this week

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Pretoria, 13 April 2018 – South African Revenue Service (SARS) Customs officials at OR Tambo International Airport (ORTIA) this week confiscated 108kg of drugs which were hidden in boxes and declared as ‘calcium carbonate’.

Officials inspected the boxes in the cargo section at ORTIA after they arrived from Kenya on Tuesday. They discovered a white powdery substance and a brown sand-like substance, which they sent to a private laboratory for testing. The results came back positive for the drug ketamine (the white powdery substance) and Acetylanthranil, a base ingredient for Methaqualone (mandrax).

The case has been handed over to the Hawks for further investigation.

In another incident, a truck leaving Lesotho was stopped yesterday (12 April) at Ficksburg border post in the Free State and searched after the driver acted suspiciously. Customs officials then discovered 207 bags filled with cannabis weighing over 6000kg. The total value of the cannabis is over R9million. The driver was taken into police custody.

SARS Customs this week also released statistics for the total number of busts which took place over the past financial year.

The combined value of goods confiscated from 1 April 2017 to 31 March 2018 adds up to over R 2.3-billion.

According to Chief Officer for Customs and Excise, Mr Teboho Mokoena, the seizure of counterfeit clothing, footwear and other goods made up the biggest contribution, amounting to R1.8-billion.

This was followed by the seizure of narcotics, including Tik, cocaine and other drugs, amounting to over R326-million.

Some of the statistics include:

  • Narcotics: 728 busts valued at R R326 898 911

  • Cigarettes: 383 busts valued at R29 659 899

  • CITES (including endangered species such as rhino horns and abalone): 55 busts valued at R45 298 167

  • Currency: 21 busts valued at R79 304 889

  • Viagra / Viagra Generics: 214 busts valued at R17 717 200

  • Counterfeit clothing, footwear and other goods: 1698 busts valued at R1 811 678 633

  • Clothing and Textiles (second hand and other infringements): 51 busts valued at R76 860 835

  • Alcohol: 269 busts valued at R4 647 665

Some of the high-profile busts which took place during this period include a special high-visibility joint operation, led by SARS Customs and involving various government agencies, in Cape Town on 1 and 2 March 2018.

It resulted in 46 busts of goods with a value of R33 229 233. The biggest bust of the operation was the discovery of uncut crystal methamphetamine (tik) with an estimate value of R30-million stashed in fridges on a truck which arrived in Cape Town from Johannesburg.

In the same truck, a large amount of suspected counterfeit clothing was also discovered. The truck driver was arrested.

Other highlights include the seizure of:

  • Rhino horn with an estimated value of R5 752 000 en route from South Africa to Hong Kong, at OR Tambo International Airport

  • Cocaine with an estimated value of R56 676 900 en route from Brazil to Australia via South Africa,  at OR Tambo International Airport

  • Cocaine with an estimated value of R10 069 500 en route from Brazil to Namibia via South Africa, at OR Tambo International Airport

  • Cocaine with an estimated value of R7 480 200 en route from Brazil to Congo via South Africa seized at OR Tambo International Airport

  • Crystal Meth with an estimated value of R7 200 000 from Nigeria to South Africa, at OR Tambo International Airport

  • Rhino horn with an estimated value of R4 600 000 en route from Zambia to Hong Kong via South Africa, at OR Tambo International Airport

  • Currency (US dollars) valued R6 717 848 en route from South Africa to Dubai, at OR Tambo International Airport

  • Ecstasy with an estimated value of R33 600 000 en route from Cameroon via Kenya to South Africa, at OR Tambo International Airport

  • Currency (US dollars) valued R10 328 010 en route from South Africa to Canada, at OR Tambo International Airport

  • Currency (US dollars) valued R10 069 249 en route from Angola to South Africa, at OR Tambo International Airport.

  • Sexual Enhancement Tablets valued R5 260 000 en route from India via Seychelles to South Africa, at OR Tambo International Airport

  • Currency (Rands and US dollars) valued R10 323 591.00 en route from South Africa to Dubai, at Cape Town International Airport

  • Currency (Rands and US dollars) valued R6 198 828.50 en route from South Africa to Dubai, at King Shaka International Airport

  • Crystal Meth with an estimated value of R6 180 000 en route within South Africa, at OR Tambo International Airport

  • Abalone with an estimated value of R10 000 000.00 en route from South Africa to China, at Port Elizabeth Harbour

  • Kamagra (Generic Viagra) valued at R4 000 000 en route from India to South Africa, at OR Tambo International Airport

  • Ephedrine with an estimated value of R17 202 000 en route from Kenya to South Africa, at OR Tambo International Airport

  • Currency (US dollars and pound sterling) valued R15 000 000 en route from South Africa to Dubai, at OR Tambo International Airport

  • Viagra valued R9 000 000 en route from Dubai to South Africa, and OR Tambo International Airport

  • Crystal Meth with an estimated value of R8 358 000 en route from Rwanda to South Africa, at OR Tambo International Airport

  • Ephedrine with an estimated value of R17 202 000 en route from Kenya to South Africa, at OR Tambo International Airport

To see the infographics, click here.

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11 April 2018 – SARS to host BRICS heads of Customs authorities

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PRETORIA, 11 April 2018 – The South African Revenue Service (SARS) will host the Customs Cooperation Meeting, which is a representation of the heads of customs authorities from BRICS member countries: Brazil, Russia, India, China and South Africa with a view to enhance relations and further improve co-operation and promote development among BRICS member countries.

The heads of customs administrations from BRICS member countries will meet in Durban from 18 to 19 April 2018. This meeting will be preceded by a customs experts meeting at the same venue from 16 to 17 April 2018. SARS will also host the tax experts and the heads of tax administrations in June 2018. These meetings are part of government wide departmental meetings that forms part of the build up to the 10th BRICS Summit which South Africa will host as chair of BRICS in August 2018.

The South African Government has committed itself to using its role as chair of BRICS in 2018 to strategically plan towards the goal of improved co-operation in the next decade.

Government has also committed itself to follow through on the agenda that was set in Xiamen, China in 2017, when China was chair, to ensure maximum synergy and continuity.

This will be the second time that South Africa is hosting the BRICS Summit, after previously hosting the Summit in March 2013.

South Africa’s membership of BRICS is a vital element in pursuit of its foreign policy priorities, including the promotion of the African Agenda, sustainable development, global governance reform and cooperation.

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6 April 2018 – SARS’s stance on the tax treatment of cryptocurrencies

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PRETORIA, 06 April 2018 – The South African Revenue Service (SARS) will continue to apply normal income tax rules to cryptocurrencies and will expect affected taxpayers to declare cryptocurrency gains or losses as part of their taxable income.

The onus is on taxpayers to declare all cryptocurrency-related taxable income in the tax year in which it is received or accrued.  Failure to do so could result in interest and penalties.

Taxpayers who are uncertain about specific transactions involving cryptocurrencies may seek guidance from SARS through channels such as Binding Private Rulings (depending on the nature of the transaction).

Increased attentiveness and speculation regarding the future of cryptocurrencies has prompted calls for SARS to provide direction as to how cryptocurrencies should be treated for tax purposes. However, as indicated in this media statement, there is an existing tax framework that can guide SARS and affected taxpayers on the tax implications of cryptocurrencies, making a separate Interpretation Note unnecessary for now.

Cryptocurrency (typified by Bitcoin) is an internet-based digital currency that exists almost wholly in the virtual realm. A growing number of proponents support its use as an alternative currency that can pay for goods and services much like conventional currencies.

In South Africa, the word “currency” is not defined in the Income Tax Act (the Act).  Cryptocurrencies are neither official South African tender nor widely used and accepted in South Africa as a medium of payment or exchange. As such, cryptocurrencies are not regarded by SARS as a currency for income tax purposes or Capital Gains Tax (CGT). Instead, cryptocurrencies are regarded by SARS as assets of an intangible nature.

Whilst not constituting cash, cryptocurrencies can be valued to ascertain an amount received or accrued as envisaged in the definition of “gross income” in the Act.

Following normal income tax rules, income received or accrued from cryptocurrency transactions can be taxed on revenue account under “gross income”.

Alternatively such gains may be regarded as capital in nature, as spelt out in the Eighth Schedule to the Act for taxation under the CGT paradigm.

Determination of whether an accrual or receipt is revenue or capital in nature is tested under existing jurisprudence (of which there is no shortage).

Taxpayers are also entitled to claim expenses associated with cryptocurrency accruals or receipts, provided such expenditure is incurred in the production of the taxpayer’s income and for purposes of trade.

Base cost adjustments can also be made if falling within the CGT paradigm.

Gains or losses in relation to cryptocurrencies can broadly be categorised with reference to three types of scenarios, each of which potentially gives rise to distinct tax consequences:

(i) A cryptocurrency can be acquired through so called “mining”. Mining is conducted by the verification of transactions in a computer-generated public ledger, achieved through the solving of complex computer algorithms. By verifying these transactions the “miner” is rewarded with ownership of new coins which become part of the networked ledger.  


This gives rise to an immediate accrual or receipt on successful mining of the cryptocurrency. This means that until the newly acquired cryptocurrency is sold or exchanged for cash, it is held as trading stock which can subsequently be realized  through either a normal cash transaction (as described in (ii) or a barter transaction as described in (iii) below. 

(ii) Investors can exchange local currency for a cryptocurrency (or vice versa) by using cryptocurrency exchanges, which are essentially markets for cryptocurrencies, or through private transactions. 

(iii) Goods or services can be exchanged for cryptocurrencies. This transaction is regarded as a barter transaction. Therefore the normal barter transaction rules apply.

Value-Added Tax (VAT)

The 2018 annual budget review indicates that the VAT treatment of cryptocurrencies will be reviewed. Pending policy clarity in this regard, SARS will not require VAT registration as a vendor for purposes of the supply of cryptocurrencies.

3 April 2018 – SARS announces R1 216.6 billion preliminary revenue outcome

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Pretoria, 03 April 2018 – The South African Revenue Service (SARS) is pleased to announce that it has collected an amount of R1216.6 billion in the financial year 2017/18. It should be noted that these are preliminary results, which will be subject to final audit. SARS collected a gross amount of R1451.0 billion which was offset by refunds of R234.3 billion, resulting in net collections of R1216.6 billion.

The revenue outcome is R0.7 billion (0.06%) short of the forecasted Revised Estimate announced by the Minister of Finance in February 2018 Budget speech. It represents a growth of R72.4 billion (6.3%) compared to the 2016/17 financial year.

Revenue collection is driven by the state of the economy, the fiscal policy choices, administrative efficiency and taxpayer compliance or tax morality. As much as the performance of any tax administration is premised on the economy, other key determinants are business and consumer confidence, tax morality and the credibility of the tax administration. 

The 2017/18 financial year was characterised by distinct and clearly delineated growth patterns. Until December 2017, revenue in aggregate grew by 6.2% year on year. For the period December to February 2018, revenue growth, on a month-on-month basis accelerated to between 9.5% and 15.5%, strengthening aggregated year-on-year growth to about 7.3%. This strengthening of revenue growth during this 3-month period can be attributed to:

  • An improvement in business confidence to levels last seen in 2015, resulting in improved profit outlook and hence provisional payments;

  • Strengthening of commodity prices, which buoyed company income tax from especially the mining sector in December 2017;

  • Purchasing Manager’s Index (PMI) which indicated a recovery in the manufacturing sector, which translated in improved company income tax (CIT) from this sector.

  • The stronger currency towards the latter part of 2017 assisted companies with imports, which benefitted our trade taxes.

The slower recovery of consumer confidence resulted in lower domestic VAT. As a result, domestic VAT grew at a muted level of 4.5%, well below the 8.1% growth seen in the previous year. Business confidence is yet to translate into higher employment numbers and significant growth in the wage bill. As a result, Pay-As-You-Earn (PAYE), the largest contributor to the SARS tax portfolio, came in at 8.6% significantly below the 9.2% levels experienced in prior two years.

Revenue collections, on a month-on-month basis, contracted in March 2018, driving down the aggregated yearly growth to 6.3%. Dividend taxes contracted by R3.9 billion in relation to prior year. In the prior year, companies anticipated an increase in the Dividend Tax rate, which changed from 15% to 20% effective 22 February 2017 declared extra ordinarily high dividends. Due to the shorter business month in March, Customs had to close their statements two days earlier than normal shifting about R1.8 billion to the next financial year. Domestic VAT from large business came in flat in March 2018, deviating from the growth trajectory established during the course of the year.

The main sources of revenue that contributed to the R1216.6bn were Personal Income Tax (PIT), Value-Added Tax (VAT) and Company Income Tax (CIT).

  • PIT contributed R462.5 billion (38.0%)

  • VAT contributed R297.8 billion (24.5%)

  • CIT contributed R220.2 billion (18.1%)

  • Customs contributed R49.4 billion (4.1%)

Every year SARS implements comprehensive initiatives to optimise revenue collections. The short-term Special Voluntary Disclosure Program, initiated to offer taxpayers the opportunity to declare off shore wealth raised R2,9 billion in taxes in the financial year from 827 processed SVDP applications from the 2024 applications received. The ongoing Voluntary Disclosure Program continues to perform well and has realised R10.8 billion since 2012 when the VDP was launched.

SARS collected more than R0.8 billion from the national Prominent Business Individuals project. This initiative was developed to ensure an end-to-end view of a taxpayer’s business profile and hence tax liability.

Invoking paragraph 19(3) of the Fourth Schedule of the Income Tax Act, SARS may request additional payments from provisional taxpayers based on the latest estimates of financial performance. This year SARS collected R10.7 billion from Paragraph 19(3) interventions.

For any tax authority, tax compliance is one of the key determinants of its revenue performance. SARS has seen a deterioration in compliance as indicated by the overall growth in outstanding returns across all taxes. More concerning though is the increasing tendency of business to withhold taxes such as VAT and PAYE collected on behalf of SARS. We have stepped up our outreach and enforcement programs and our call centres and offices made over one million outbound calls to taxpayers. Our outstanding returns campaign will be boosted this year to bring this matter under control. SARS is collaborating with the Department of Justice to expedite the prosecution of tax offences.

Despite this decline in compliance, most taxpayers continue to perform their tax obligations diligently. Today SARS wants to say a huge thank you to all South Africans for this massive contribution to our future growth and development.

We also want to acknowledge the dedication and professionalism of our 13 500 staff members who have weathered severe reputational challenges to SARS, keeping the administration on course.

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29 March 2018 – Trade Statistics for February 2018

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Pretoria, 29 March 2018 – The South African Revenue Service (SARS) today releases trade statistics for February 2018 recording a trade balance surplus of R0.43 billion. These statistics include trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS). The year-to-date (01 January to 28 February 2018) trade balance deficit of R26.69 billion is a deterioration on the deficit for the comparable period in 2017 of R7.59 billion. Exports year-to-date grew by 3.1% whilst imports for the same period showed an increase of 14.0%.

28 March 2018 – All systems go for Sugary Beverages Levy

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Pretoria, 28 March 2018 – The South African Revenue Service (SARS) is ready to implement the Sugary Beverages Levy (SBL) which comes into effect on 1 April 2018.

Manufacturers that produce sugary beverages with a total annual sugar content in excess of 500 kg per year need to be licensed with SARS and pay the levy to SARS. Those manufacturers that produce below the 500kg per year will not have to pay the levy, but they are required to register with SARS.

SARS has ensured the necessary systems are available to effectively and efficiently deal with the processing, licensing and registration of manufacturers of sugary beverages.

The levy will be charged at 2.1 cents per gram of the sugar content which exceeds 4 grams per 100ml. This means that the first 4 grams per 100ml are levy free. Sugary beverages manufactured before 1 April 2018 will not be subject to the levy.

In line with SARS’s approach to educate taxpayers and make it easy to comply with their tax obligations, SARS has engaged importers, manufacturers and other industry stakeholders through a series of roadshows held in five provinces earlier in March.

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27 March 2018 – SARS ready to implement VAT rate increase

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Pretoria, 27 March 2018 – The South African Revenue Service (SARS) is ready to implement the increase in Value-Added Tax (VAT) announced by the Minister of Finance in February.

The Minister announced that the VAT rate would increase from 14% to 15% as from 1 April 2018.

SARS teams have been working on changes to the systems which are used to receive VAT declarations made by vendors and calculate any VAT refunds or VAT due to SARS.  Changes to the VAT201 form have been made to reflect the increase in the VAT rate.

Vendors who use SARS eFiling to submit their VAT return and have saved returns that span periods before and after 1 April 2018 will notice that those saved returns have been removed as they contain incorrect VAT rates. Vendors must request a new VAT201 on eFiling.

SARS would also like to urge vendors to update their systems to align to the new VAT rate in preparation for 1 April 2018. This will minimise confusion for the customer and make it easier for vendors to remain tax compliant and make the correct declarations to SARS.

SARS has also set up a dedicated VAT-rate email address at VATRateEnquiries@sars.gov.za, to which vendors can direct their questions and queries. Vendors may also contact the SARS Contact Centre on 0800 00 7277.

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20 March 2018 – Appointment of Mark Kingon as Acting Commissioner

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Pretoria, Tuesday 20 March 2018 – The South African Revenue Service (SARS) welcomes the appointment of Mr Mark Kingon as acting Commissioner with immediate effect.

Mr Kingon’s appointment was announced by the Minister of Finance, following the suspension of Mr Tom Moyane as SARS Commissioner by President Cyril Ramaphosa.

Mr Kingon was the Group Executive: Relationship Management within Business and Individual Taxes (BAIT) and was recently appointed acting Chief Officer: BAIT following the resignation of Mr Jonas Makwakwa last week.

Mr Kingon is a respected senior executive who has risen through the ranks of the organisation, having worked in enforcement and in the legal departments of SARS, amongst others.

He joined the then Receiver of Revenue in Pretoria 34 years ago and has occupied various roles within SARS Operations which included Legal Interpretation, Enforcement, Business Systems and Operational Support.

He was very closely involved with a subcommittee of the Katz Commission responsible for the Non-Profit Sector. This led to the current tax regime for Public Benefit Organisations and the eventual establishment of the Tax Exemption Unit within SARS that serves this sector.

Mr Kingon matriculated from Clapham High School, Pretoria (Class of 1981) and holds a Bachelor of Administration Degree from the University of South Africa. He is also widely respected within the broader professional tax community.

SARS has full confidence in the abilities of Mr Kingon to manage this new additional role as we continue with our absolutely important mandate of collecting all revenue due to the fiscus to fuel our country’s growth and development.

See our Media gallery for a picture of Mark Kingon.

14 March 2018 – SARS Customs busts goods worth close to R400 million since 1 January

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Pretoria, 14 March 2018 – A currency bust at OR Tambo International Airport (ORTIA) was the latest in a string of busts which have netted the South African Revenue Service (SARS) Customs division illicit/illegal goods valued at close to R400 million since 1 January.

The bust last week Tuesday (6 March 2018) was the latest in a total of six currency busts since 1 January with a combined value of over R27 million. In Tuesday’s bust, a South African male about to depart for Dubai was intercepted and taken to the search area where Customs officers scanned his luggage. 

Currency in US dollars, valued at R4 595 344, was found hidden in sweet containers, milk powder tins and soap boxes under clothing. The passenger failed to give a valid reason or produce documentary proof of origin for the currency. The currency was detained and the passenger was arrested for smuggling of currency by SAPS.

Other highlights of busts since 1 January 2018 include:

  • Narcotics: 122 busts valued at R102 825 888

  • Cigarettes: 27 busts valued at R593 707

  • CITES (incl endangered species such as rhino horns and abalone): 9 busts valued at R13 285 213

  • Viagra / Viagra Generics: 36 busts valued at R5 118 400

  • Counterfeit clothing, footwear and other goods: 320 busts valued at R206 849 590

  • Alcohol: 40 busts valued at R978 470

SARS’s Tactical Intervention Unit, which focuses on particular areas of non-compliance, recorded the following successes in the same period:

  • Illicit cigarettes and tobacco: 45 busts valued at R10 732 767

  • Clothing, textiles and other goods: 23 busts valued at R23 816 086

Some of the other high-profile busts include the following:

  • A special high-visibility joint operation, led by SARS Customs and involving various government agencies, took place in Cape Town on March 1 and 2 and resulted in 46 busts of goods with a value of R33 229 233. The biggest bust of the operation was the discovery of uncut Crystal Methamphetamine (tik) with an estimate value of R30m stashed in fridges on a truck which arrived in Cape Town from Johannesburg. In the same truck, a large amount of suspected counterfeit clothing was also discovered. The truck driver was arrested. The operation, under the auspices of Operation Phakisa, also led to the detection of 177 cases of non-compliance, including possible under-valuation, non-declaration of goods, non-permits for import purposes, illegal transporting of abalone and detention of vehicles.

  • Fentanyl/Oxycodone with an estimated value of R30 000 000.00 en route from China to South Africa seized at OR Tambo International Airport.

  • Ephedrine with an estimated value of R4 200 000.00 en route from Tanzania to South Africa seized at OR Tambo International Airport.

  • Heroin with an estimated value of R3 600 000.00 en route from Mozambique to South Africa seized at Lebombo Border Post.

  • Heroin with an estimated value of R3 188 598.00 en route from South Africa to Mauritius seized at OR Tambo International Airport.

  • Ephedrine with an estimated value of R17 202 000.00 en route from Kenya to South Africa seized at OR Tambo International Airport.

  • Crystal Meth with an estimated value of R6 000 000.00 en route from Rwanda to South Africa seized at OR Tambo International Airport.

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