Last Updated on September 21, 2023 by ufiling
If you are unable to pay the South African Revenue Service (SARS), there can be several consequences. SARS is responsible for collecting taxes and ensuring compliance with tax laws in South Africa. Here are some possible outcomes if you cannot pay your tax obligations:
- Interest and penalties: SARS may impose interest and penalties on the outstanding amount. Interest accrues on the outstanding balance from the due date until the full payment is made. Penalties can vary depending on the type of tax and the circumstances.
- Debt recovery actions: SARS has the authority to take various debt recovery actions to collect the outstanding tax. These actions may include issuing a final demand letter, attaching your assets, garnishing your wages, or placing a judgment against you.
- Legal action: If you continue to ignore your tax obligations and fail to make payment arrangements, SARS can take legal action against you. This can result in a court judgment, which may lead to the seizure of your assets or the auctioning of your property to recover the tax debt.
- Restriction on services: SARS has the power to restrict certain services until your tax obligations are settled. For example, they may refuse to issue tax clearance certificates, which are often required for various business transactions.
- Compromise or payment arrangement: In some cases, SARS may consider a compromise or a payment arrangement based on your financial situation. This would involve negotiating a reduced payment amount or a structured payment plan to help you settle your tax debt over time. However, this is subject to SARS’ discretion and may require demonstrating a genuine inability to pay.
It’s important to note that failing to pay taxes can result in serious consequences, so it’s advisable to communicate with SARS as soon as possible if you are facing financial difficulties. SARS may be willing to work with you to find a suitable solution based on your circumstances.