Last Updated on September 21, 2023 by ufiling
SARS (South African Revenue Service) is responsible for the administration and collection of taxes in South Africa. When it comes to late payments, SARS has policies and regulations in place to ensure timely payment of taxes and to address situations where payments are not made on time. Here’s a discussion on SARS’ interest on late payments:
- Late Payment Interest Rate: SARS charges interest on late tax payments in accordance with the provisions of the Tax Administration Act, 2011. The interest rate is determined by the South African Reserve Bank and is usually set at the repo rate plus 3.5%. It is important to note that the interest rate can change over time based on economic conditions.
- Calculation of Interest: SARS calculates interest on late payments based on the number of days the payment is overdue and the amount outstanding. The interest is calculated daily, starting from the due date of the payment until the date of actual payment.
- Types of Taxes: Late payment interest applies to various types of taxes, including income tax, value-added tax (VAT), payroll taxes, and other statutory taxes. It is crucial for individuals and businesses to ensure that their tax liabilities are settled on time to avoid incurring interest charges.
- Penalties for Non-Compliance: In addition to interest charges, SARS may also impose penalties for late or non-payment of taxes. The penalties can vary depending on the type of tax and the severity of the non-compliance. It is advisable to consult SARS guidelines or seek professional advice to understand the specific penalties applicable in different situations.
- Compliance and Consequences: SARS places significant emphasis on tax compliance, and failure to pay taxes on time can have consequences. Persistent late payments or non-compliance may result in more severe penalties, audits, or other enforcement actions by SARS.
- Communication with SARS: If individuals or businesses are facing difficulties in making tax payments on time, it is advisable to proactively communicate with SARS. SARS may be open to discussing payment arrangements or providing extensions in certain circumstances. Initiating communication and addressing the issue promptly can help mitigate any negative consequences.
It is essential to note that the information provided here is based on general knowledge up to September 2021. Tax regulations and policies can change, so it’s always important to consult the latest information provided by SARS or seek professional advice to ensure accurate and up-to-date understanding of SARS’ interest on late payments.