COMPANIES that intentionally avoid paying tax could face penalties of up to 150% of the money owed to the South African Revenue Service (SARS), and this could increase up to 200% in cases where the company is seen as being obstructive, or is considered a repeat offender.
If one considered a company’s tax liability as being one of the bigger line items on an income statement, this issue was very serious, and could even close businesses, Marcus Botha, leader of tax risk assurance at PwC, warned on Thursday.
Speaking at the Compliance Institute of Southern Africa’s annual conference in Johannesburg on Thursday, Mr Botha said companies who had a limited, or no tax control framework, ran a serious risk of falling foul of the new provisions of the Tax Administration Act.
The institute hosted a two-day conference, which focused on legislation and regulatory compliance affecting local and international companies doing business in South Africa.
Mr Botha said companies with weak tax control systems would be unable to show that they were not intentionally avoiding tax, or that they did take reasonable care in completing their returns.
Companies who were found not to have taken "reasonable care" in completing their returns could be fined up to 75% of the tax deemed liable by SARS.
"It is a very broad statement … and it could be considered a criminal offence under the new Tax Administration Act."
Economists, statisticians, and analysts at SARS were compiling profiles on taxpayers using all information available to them, including the print media, annual reports, company transactions, and companies’ approaches to tax.
The results of these profiles, or "risk engines", would be used in every tax audit that SARS does, which would give auditors a more focused approach, Mr Botha said.
Other compliance matters raised at the conference pertained to the Financial Markets Bill, environmental compliance and the Consumer Protection Act.
Jacques du Toit, environmental management inspector at the Department of Environmental Affairs, said people were suffering from "green fatigue".
The task of the inspectorate, better known as the Green Scorpions, was to proactively monitor compliance. The inspectorate continued its focus on the ferroalloy, steel, iron, and cement industries, as well as refineries, Mr Du Toit said.
The Financial Markets Bill, which replaces the Security Services Act, is designed to increase investor confidence in South Africa.
Michael Denenga, director of the specialist consultancy Corporate Counsel, said that the bill, which still needed a lot of work, could be signed into law by the end of the year.
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