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In a recent Business Tech article, the South African Revenue Service (SARS) claims it is owed a “theoretical” R800 billion, with R500 billion of that amount potentially collectible.

SARS Commissioner Edward Kieswetter stated that a strengthened SARS could address many of the government's funding challenges. Consequently, Finance Minister Enoch Godongwana allocated an additional R3.5 billion to SARS in the revised March 2025 Budget to enhance its collection efforts.

SARS presented its analysis of the 2025 Budget to Parliament's finance cluster, detailing how it arrived at these figures. According to SARS, South Africa's total "true" tax liability is approximately R2.5 trillion. With total taxes paid amounting to around R1.5 trillion, this leaves R1 trillion unaccounted for. SARS indicated that about R200 billion of this amount is being addressed through its compliance programs, leaving R800 billion "under-recovered."
SARS says this includes various disputed and undisputed debts, litigation, and settlements.

Breaking it down even further, approximately R78.5 billion remained uncollected from corporates (CIT), R200 billion from income taxpayers (PIT) and R200 billion from VAT.

Where SARS is Focusing Its Tax Collection Efforts

While the potential for uncollected tax revenue is significant, SARS must allocate substantial resources to recover it. To strengthen compliance and boost revenue, SARS is intensifying its focus on key areas, including expanding tax bases and cracking down on fraud and tax evasion. Here are the priority areas SARS has identified for increased enforcement:

• Expanding the tax base across both formal and informal economies.
• Tightening international taxes, with a focus on Base Erosion and Profit Shifting, and digitalisation.
• Cracking down on trade-based money laundering and illicit financial flows, particularly in tobacco, fuel, and gold industries.
• Tackling trade mispricing and undervaluation fraud.
• Regulating e-commerce, with an emphasis on small parcels (e.g. Temu and Shein).
• Targeting high wealth individuals (HWIs).
• Monitoring cryptocurrency transactions.
• Combating syndicated tax and customs crimes, including VAT fraud and other tax offenses.

SARS has already established dedicated units for some of these areas, such as those focused on HWIs and cryptocurrency. Additionally, SARS aims to concentrate its efforts on specific sectors, including:

• Mining and quarrying
• Construction (bricks, ceramics, glass, cement, and similar industries)
• Transport, storage, and communications
• Agencies and other services
• Agriculture, forestry, and fishing
• Clothing and footwear
• Personal and household services
• Transport equipment

SARS Intensifies Scrutiny on Individual Taxpayers

SARS is ramping up its focus on individual taxpayers, particularly those flagged as not needing to file tax returns yet displaying significant wealth.

The agency’s systems identified 115,506 individuals with substantial economic activity—such as large asset holdings and bank transactions—who were not filing taxes. This has led to 54,800 audit cases, resulting in assessments totalling R5.56 billion, with R1.36 billion already collected.
Additionally, SARS uncovered 36,000 unregistered taxpayers with a potential tax liability of R30 billion. So far, 14,000 of these individuals have been registered, generating R140 million in revenue, though some of these assessments remain under dispute.

Why You Need Tax Risk Insurance!

Think you're safe from a SARS audit? Think again. Even if your tax affairs are in order, SARS can still select you for an audit—often leading to incorrect reassessments and unfair tax demands. Disputing these assessments can be complex, time-consuming, and costly, requiring expertise that most taxpayers simply don’t have.

This is where Tax Risk Insurance steps in. If you, your business, or your trust is targeted by SARS for an audit or faces an unfair tax dispute, tax risk insurance covers the cost of a team of expert tax professionals to handle the process for you—ensuring a fair outcome without the financial strain.

Stay protected. Stay prepared. Secure your Tax Risk Insurance today!

From BusinessTech | 30 March 2025 | Staff Writer