Last Updated on September 21, 2023 by ufiling
SARS penalties and interest in South Africa are typically imposed when taxpayers fail to comply with their tax obligations. The calculation of penalties and interest varies depending on the specific circumstances and the type of non-compliance involved. However, I can provide you with a general overview of how these calculations are typically made.
- Penalties: SARS (South African Revenue Service) imposes penalties for various types of non-compliance, such as late submission or non-submission of tax returns, late payment of taxes, underestimation of taxes, or deliberate tax evasion. The penalties are calculated as a percentage of the tax liability or the amount outstanding. The exact percentage applied depends on the type of non-compliance and the number of previous offenses.
For example, if you fail to submit your tax return on time, SARS may impose a penalty of 10% of the tax liability for the first offense. If it’s a subsequent offense, the penalty percentage can increase up to a maximum of 200% of the tax liability.
- Interest: SARS also charges interest on outstanding tax amounts. The interest is calculated on a daily basis and accrues from the due date of the tax liability until the date of payment. The interest rate is determined by SARS and is typically based on the South African Reserve Bank’s repo rate.
To calculate the interest, SARS uses the formula: Interest = Tax Amount * Interest Rate * Number of Days / 365
For example, if you have an outstanding tax amount of R10,000 and the interest rate is 10%, and you’re 30 days late in making the payment, the interest calculation would be: Interest = 10,000 * 0.10 * 30 / 365 = R82.19
It’s important to note that SARS has the authority to waive or reduce penalties and interest in certain circumstances, such as when the taxpayer can provide a valid reason for the non-compliance or demonstrates a willingness to rectify the situation.
The specific calculations for penalties and interest may vary depending on the situation and the discretion of SARS. It’s always recommended to consult with a tax professional or contact SARS directly for accurate and up-to-date information regarding penalties and interest calculations.