Jashwin Baijoo | Partner | Head | Strategic Engagement & Compliance | Tax Consulting SA | mail me |
The vision of “A Smart Modern South African Revenue Service (SARS) with unquestionable integrity admired by all” is a profound set of words shared by Dr Johnstone Makhubu, SARS Commissioner, at the 13th Annual Tax Indaba.
Beyond words, SARS’ actions have more than echoed this sentiment. They have made it clear to the world that political power, fame and money cannot keep non-compliant taxpayers off SARS’ radar. Indeed, the relationship between power and politics and tax compliance continues to attract attention as SARS strengthens its enforcement capabilities.
SARS has undertaken numerous successful, targeted compliance and collection initiatives, including criminal prosecution. Most recently, its scope has extended to Vusimuzi “Cat” Matlala.
Matlala is already a focal point for numerous investigations into fraud, corruption and money laundering. He must now also deal with the taxman over a R14,2 million bill accumulated under his company, Medicare24 Tshwane.
With SARS now in the mix, the prospect of imposing personal liability on Matlala becomes very real. SARS can pursue this course of action through its statutory powers enshrined in tax legislation. This development also highlights how power and politics offer no automatic protection against tax enforcement.
Prosecution via personal liability
Given SARS’ enhanced ability to detect non-compliance and its sharp focus on both historical and future non-compliance, correct tax and legal guidance has never been more critical.
The most prudent approach is to heed SARS’ warning that non-compliance will be difficult and costly for offending taxpayers. Tax legislation provides a lengthy list of criminal offences relating to tax non-compliance. In Matlala’s case, these provisions could add to his already extensive list of legal troubles.
For the average business owner, and even prominent business figures, a common misconception persists. Many believe that a company’s debts cannot be attributed to its directors, shareholders, or other persons who directly or indirectly control its financial affairs.
To clarify this issue, tax legislation already provides for personal liability. This provision can apply to any person who controls or regularly participates in managing a company’s overall financial affairs. However, the person’s negligence or fraud must have resulted in the company’s failure to pay its tax debts.
Once SARS activates this mechanism, lawful collection measures may include freezing personal assets and appointing third parties to pay funds to SARS. These appointments can target any person or institution holding funds for, or owing funds to, the offending taxpayer.
Importantly, tax legislation does not specifically require formal responsibility for a company’s finances. Instead, it requires a person to exercise a degree of control over, or regularly participate in, the company’s overall financial affairs.
Specifically, section 180 of the Tax Administration Act 28 of 2011 extends to persons who exercised some form of pre-emptive or informal control over a company’s financial affairs. These persons may include shareholders, directors and others who were factually involved in managing those affairs.
Contravening tax legislation can tarnish an individual’s or company’s reputation. Furthermore, it can result in substantial financial penalties, legal consequences and potential imprisonment. The implications extend beyond the immediate financial burden, reinforcing the principle that power and politics cannot replace sound governance, lawful conduct and responsible tax management.
The expanding use of third-party financial data
Under former Commissioner Edward Kieswetter’s leadership, SARS steadily rebuilt its institutional capacity and invested heavily in digital modernisation.
Continuing this legacy, Commissioner Makhubu emphasises:
The future of tax administration is not people versus technology, but it is people and technology working together to make compliance easier, services faster, and enforcement more precise. Technology must strengthen human capability, not replace it.
In practical terms, SARS increasingly integrates vast streams of third-party financial data into its compliance ecosystem. Financial institutions, employers, medical schemes, investment platforms and other reporting entities supply structured data to SARS. This information enables the revenue authority to compare taxpayers’ declarations against independently sourced financial records.
Risk-profiling models can identify taxpayers who may have understated their income or claimed inappropriate deductions. Once SARS flags a case, it can move quickly from automated engagement to enforcement. The authority may conduct robust historical audits or proceed directly to civil judgment against an offending taxpayer who has ignored more amicable collection attempts.
These developments demonstrate how digital modernisation strengthens SARS’ ability to identify discrepancies and pursue non-compliance. They also reinforce the importance of understanding how financial transparency, institutional accountability, power and politics intersect within South Africa’s tax administration system.
Where data and debt collection meet
The connection between these developments and Project AmaBillions is increasingly clear. A modern, data-integrated revenue authority does not rely on chance discoveries. Instead, it relies on information.
Once SARS identifies undisputed tax debts, it can identify taxpayer assets, both locally and offshore. It can also verify financial activity using supplied data and coordinate enforcement across civil judgments and third-party appointments.
Collectively, these measures form part of SARS’ modern debt-collection strategy. They are reshaping how the revenue authority engages with taxpayers. SARS now communicates with taxpayers through various digital platforms. These include SMS notifications, online portal alerts and messaging services such as WhatsApp.
Although these messages may feel informal compared with traditional letters of demand, they form part of a deliberate strategy. SARS uses them to make taxpayers aware of important compliance notifications and encourage them to meet their obligations. This approach also makes it more difficult for taxpayers to plausibly claim that they missed critical communications.
Enhancing voluntary compliance through technology and trust
If you or your business, like Medicare24, finds itself staring down the barrel of SARS’ collections cannon, a timely response is imperative. You must also provide all the correct supporting documentation.
Failure at this first hurdle can have serious consequences, particularly if you have made an incorrect disclosure to SARS. The pressure can intensify when SARS issues additional assessments or final demands for overdue tax debts.
In an audit, understatement penalties can deliver the final blow. These penalties can reach 200% of the tax shortfall, creating a potentially crippling financial burden. Taxpayers must also remember that SARS can audit historical tax submissions, including those that may have escaped scrutiny when originally submitted.
When dealing with tax non-compliance, access to appropriate legal advice and the protection of legal professional privilege are essential considerations. This is particularly important when SARS suspects or has already detected current or historical non-compliance or other tax risks. Taxpayers should obtain appropriate professional advice to understand their rights, obligations and available protections.
As a rule of thumb, taxpayers should address all correspondence from SARS holistically. A strong, multidisciplinary tax, legal and financial team can help them assess the issues and prepare appropriate responses. This is especially important for time-sensitive correspondence, given the potential consequences of missing response deadlines.
Law-abiding taxpayers who seek to resolve their tax debts can remedy non-compliance and potentially save their businesses by engaging openly with SARS. Enlisting a strong multidisciplinary tax, legal and financial team, the “A-Team”, can help businesses navigate the complexities of tax-debt relief mechanisms. At the same time, this support can help them mitigate the risk of bankruptcy. Ultimately, taxpayers must act sooner rather than later, before SARS comes knocking.
Technology, transparency and timely professional intervention can make a significant difference. Regardless of the influence associated with power and politics, taxpayers should prioritise compliance, maintain accurate financial records and address their tax obligations before unresolved liabilities threaten their businesses.