While SARS is committed to ensuring taxpayers get their refunds, it also has a mandate to avoid revenue loss to the country’s fiscus. It does this through a series of risk mitigation measures to detect fraudulent claims and non-compliance.
During the 2016/2017 financial year, SARS’s risk detection measures prevented R35 billion of unwarranted refunds from being paid. For the current financial year to date (01 April 2017 to date), SARS has already saved the fiscus R20 billion in fraudulent claims across tax types.
SARS wishes to acknowledge the frustration that taxpayers feel when they expect a refund and it is delayed. But, the organisation aims to implement effective preventative measures to detect fraud and non-compliance.
SARS wishes to apologise for any inconvenience caused while having agile systems that make it easier to interact with SARS and prevent revenue leakages due to fraud and non-compliance.
SARS wishes to reiterate that the majority of tax refunds are processed within 72 hours without an audit. In the VAT refund space, for example, during the 2016/2017 financial year, 89% of VAT refunds were released without an audit.
In the last three years, VAT refund fraud cases investigated by SARS’ criminal investigations team amounted to over R2 billion and were handed to the National Prosecuting Authority (NPA). These cases related to the establishment of fictitious entities and the submission of fictitious VAT invoicing schemes.
Personal Income Tax (PIT) refund fraud cases investigated by SARS and handed to the NPA amounted to R148 million, for the same period. SARS currently performs at a conviction rate of 95% for all cases presented and finalised in court.
SARS strives to balance taxpayer service and risk detection as both are essential for an efficient tax administration. It is of utmost necessity to SARS to pay legitimate refunds as the flow back into the economy sustains economic momentum and assists companies to meet their cash flow requirements.
Taxpayers should be assured that processes are in place to ensure the integrity of the revenue outcome. The National Treasury, South African Reserve Bank and SARS perform joint oversight and analysis of revenue on a monthly basis and base budget estimates on the performance of taxes across tax types.
Managing refunds in order to achieve targets in excess of a trillion rand requires large scale redirection of refunds which would skew economic projections and certainly attract the attention of independent rating agencies. The parameters in place do not allow for this level of redirection of refunds.