Following on from complaints by taxpayers that the South African Revenue Service (SARS) is apparently delaying the payment of refunds, Justmoney contacted SARS for commentary. We received the below response from SARS.
SARS has noted the complaints and frustration of taxpayers about outstanding refunds, particularly pertaining to Value Added Tax (VAT). We also noted that taxpayers may perceive this as a lack of concern, care and efficiency by SARS.
But this cannot be further from the truth. It is not in the interest of SARS to withhold refunds.
There are delays in some refunds, particularly where our systems have detected risk. Risk can range from a lack of documentation to provide support to certain claims and expenses; non-corresponding banking details and outstanding returns from other years, among others. Due to an increase in fraud, and in an effort to protect both taxpayers and the national fiscus, SARS has had to strengthen our risk rules.
Notwithstanding that, we have seen that 11% of VAT return cases are allocated for detailed audit while 89% of VAT refund payments are paid. Returns that are risk alerted are routed to audit which occasionally exceed the standard turn-around time based on the specifics of the case being audited. Delay in producing outstanding information and verification of personal details are among the reasons that an audit can take longer.
By 31 January 2017, SARS paid refunds totalling R155.4 billion versus the same period last year of R142.8 billion. This is R12.6 billion (9%) more than the previous year.
To date, SARS has prevented R23.8 billion in fraudulent refunds from being paid and hence the additional scrutiny applied to high risk cases. For example, in December the last member of a 16-member syndicate that defrauded SARS of approximately R26 million over a period of seven years was sentenced to 30 years imprisonment. These cases allow SARS to review its systems and risk rules and to tighten its controls where necessary.
SARS has set up a project team to work with the Tax Ombud to look into the complaints on refund delays and to identify challenges.
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