SARS penalties and interest

Last Updated on September 21, 2023 by ufiling

SARS (South African Revenue Service) is the tax authority in South Africa, responsible for collecting taxes and enforcing compliance with tax laws. When it comes to penalties and interest, SARS has specific provisions in place to ensure that taxpayers fulfill their tax obligations on time.

Penalties:

1. Late Submission Penalty: If a taxpayer fails to submit their tax return by the specified due date, SARS may impose a penalty. The penalty amount varies depending on the taxpayer’s taxable income and the number of outstanding returns.
2. Late Payment Penalty: When a taxpayer fails to pay their tax liability on time, SARS may impose a penalty. The penalty amount is calculated as a percentage of the outstanding tax amount and increases over time.
3. Understatement Penalty: If SARS determines that a taxpayer has understated their taxable income or overstated deductions, they may impose an understatement penalty. The penalty amount can range from 25% to 200% of the additional tax payable, depending on the nature and extent of the understatement.
4. Non-compliance Penalty: SARS can impose a penalty for non-compliance with various tax obligations, such as failure to register for tax, failure to keep proper records, or failure to provide requested information. The penalty amount depends on the specific non-compliance and can vary.

Interest: In addition to penalties, SARS charges interest on overdue tax amounts. The interest is calculated daily and accrues from the due date of the tax liability until the date of payment. The interest rate is determined by SARS and can change periodically.

It’s important to note that penalties and interest are meant to encourage compliance with tax laws and ensure timely submission and payment of taxes. However, SARS does have provisions for remission or reduction of penalties and interest under certain circumstances, such as genuine errors or financial hardship. Taxpayers can engage with SARS to discuss their specific situations and explore any available options for relief or negotiation.