- 13 July 2021 – Introduction of penalties for PAYE
The penalty for late filing of a Pay-As-You-Earn (PAYE) reconciliation was introduced for the first time this year. However, we are still in the process of enhancing our Dispute Resolution process so that this penalty can be disputed separately from a PAYE late payment penalty. For more information, please see our PAYE section and Disputes section.
Welcome to the Government webpage.
SARS is committed to working closely with Government Institutions to ensure high levels of voluntary compliance. We believe in building effective and beneficial partnerships with Government to resolve tax administration issues and thereby improve voluntary compliance. Our priority is to understand and enable Government as both a taxpayer and as a strategic partner in the tax compliance value chain.
SARS is therefore committed to:
- Engaging with Government continuously and constructively
- Providing Government with relevant access and channels to improve the compliance experience
- Providing specific communications for Government
Here you will find the latest information and updates from SARS to assist you in meeting your tax obligations and broadening the culture of tax compliance.
There are three spheres of Government as per the Constitution, namely:
- Provincial; and
Clarity of what a Government institution is helps to identify taxpaying institutions that form part of the system of inter-governmental relations and SARS is able to offer the correct blend of education and service products that help these institutions achieve tax compliance. The definition of a Government Institution is as follows:
- National Government Departments per Schedule 1 of the Public Service Act;
- Provincial Government Departments per Schedule 2 of the Public Service Act;
- National Parliament as per Chapter 4 of the Constitution of the Republic of South Africa;
- Provincial Legislatures per Chapter 6 of the Constitution of the Republic of South Africa;
- Local Government: Municipalities as per the Municipal Structures Act and Section 155(6) of the Constitution;
- Municipal Entities – The Municipal Systems Act defines three types of entities that may be established by a municipality with effect from 1 August 2004 (private company, service utility or multi-jurisdictional service utility). These include Museums and Art Galleries, Community Halls, Tourism, Transport and Buses, etc.;
- Public Entities as listed in the Public Finance Management Act (PFMA);
- Public FET Colleges as defined in the Further Education and Training Colleges Act;
- Universities as defined in the Higher Education Act;
- Public Hospitals or Public Health Care Establishments as defined in the National Health Ac;
- Public Schools as defined in Chapter 3 of the South African Schools Act;
- Public Museums as defined in the Cultural Institutions Act; and
- Public Pension Funds created as per the Pension Funds Act.
- SARS manages four tax risks:
- Risk of non-registration
- Risk of non-filing
- Risk of incorrect declaration
- Risk of non-payment
It manages these risks via the application of the Compliance Model which has three approaches:
Government Institutions have a role in building tax compliance and thereby enhancing the revenue collection function of the State. Tax Compliance is enhanced when Government Institutions register for the correct tax product, they file their returns on time and they pay the taxes due on time. This then mitigates against the incurral of interest and penalties. To assist Government Institutions to meet their tax obligations, SARS elevates the service and education that is offered to Government Institutions.
- establish a framework for the national, provincial and local governments to promote and facilitate intergovernmental relations;
- provide for mechanisms and procedures to facilitate the settlement of inter-governmental disputes and
- provide for matters connected herewith.
The object of this Act is to provide within the principle of cooperative government, a framework for national, provincial and local governments and all organs of state within those governments to facilitate coordination in the implementation of policy and legislation including:
- coherent government
- effective provision of services
- monitoring implementation of policy and legislation and
- realisation of national priorities.
Promoting the Object of the Act
In conducting their affairs, the national, provincial and local governments must seek to achieve the object of this Act including by:
- taking into account the circumstances, material interest and budgets of other governments and organs of state in other governments, when exercising their statutory powers or when performing their statutory functions;
- consulting other affected organs of state in accordance with formal procedures, as determined by applicable legislation, or accepted convention or as agreed with them or, in the absence of formal procedures, consulting them in a manner best suited to the circumstances, including by way of:
- direct contact or
- any relevant intergovernmental structures;
- coordinating their actions when implementing policy or legislation affecting the material interests of other governments;
- avoiding unnecessary and wasteful duplication or jurisdictional contests;
- taking all reasonable steps to ensure they have sufficient institutional capacity and effective procedures:
- to consult, cooperate and to share information with other organs of state and
- to respond promptly to requests by other organs of state for consultation, cooperation and information sharing; and
- in intergovernmental structures of which they are members and
- in efforts to settle intergovernmental disputes.
All organs of state must make reasonable efforts to avoid intergovernmental disputes when exercising their statutory powers or performing their statutory functions and settle intergovernmental disputes without resorting to judicial proceedings.
SARS uses this framework to guide its interactions with Government Institutions.
Government Institutions may be liable for VAT on Imported Services.
Imported services refers to the supply of services by a supplier who is not a resident of the Republic or conducts business outside the Republic, to a recipient who is a resident of the Republic, to the extent such service are utilized or consumed in the Republic, otherwise than for purposes of making taxable supplies.
In terms of section 7(1)(c) of the Act, VAT at the standard rate is payable by the recipient of imported services.
VAT is not payable on imported services where:
(i) The supply would be exempt from VAT or zero-rated if supplied in the Republic
(ii) The supply of the service is subject to VAT at the standard rate (presently 15%)
(iii) A supply is of an educational service by an educational institution established in an export country which is regulated by an educational authority in that export country
(iv) The supply is of services by an employee in the course of their employment or the rendering of services by a holder of any office to the extent that remuneration is paid or payable to such employee or holder of office
(v) The value of the imported services does not exceed R100 per invoice.
Where the recipient is not registered as a vendor, the VAT liability is declared in the VAT 215 record.
The following guides contain additional information: