Question NW58 to the Minister of Finance

Reply:

(1) The South African Revenue Service, in processing all refunds, will always seek to balance the protection of the fiscus from illegitimate refund claims and the optimal processing of all refunds that are legitimate. This balance is further enhanced when considering that more than R50bn in illegitimate refunds are prevented from flowing out of the fiscus every year.

SARS has for the period ending 31 December 2021 paid R193bn in refunds and 72% (R138bn) was paid within 21 days, furthermore it is worth noting that almost 80% of all refunds claims are paid without audit or verification interventions thus confirming our compliance theory that most taxpayers are honest that want to meet their tax obligations fully. The remaining 20% is the combination of taxpayers who make genuine errors as well as those who unfortunately seek to defraud the fiscus. It must be noted that the law does not prescribe a minimum period for the completion of an audit or verification process, therefore rendering the notion of overdue refunds a misnomer in law however SARS has committed to turnaround times in its service charter in line with the SARS desire to provide superior service to taxpayers in order to bring about clarity and certainty on their affairs

 

Yes, SARS has some refunds that are outstanding. SARS at any given time will have amounts outstanding on refunds for a number of reasons, key amongst these reasons are 1) SARS is at various stages of the audit and verification process and 2) Taxpayer related issues including invalid banking details, instances of outstanding documentation where SARS has communicated in more than one instance with the taxpayer requesting such supporting documentation (these are continuous non-compliance cases) as well as instances of suspected fraud by the taxpayer. The sectorial view of the balance of refunds in audit in excess of 21 days is as follows:

Industry	Vendors	Sum of Balance
AGENCIES AND OTHER SERVICES	11718	-R 3,485,040,995.02
AGRICULTURE, FORESTRY AND FISHING	11228	-R 2,032,265,989.44
BRICKS, CERAMICS, GLASS, CEMENT AND SIMILAR PRODUCTS	338	-R 52,091,107.65
CATERING AND ACCOMMODATION	1827	-R 302,765,982.13
CHEMICALS AND CHEMICAL, RUBBER AND PLASTIC PRODUCTS	707	-R 362,900,673.78
CLOTHING AND FOOTWEAR	520	-R 67,148,930.30
COAL AND PETROLEUM PRODUCTS	555	-R 216,979,759.08
CONSTRUCTION	10316	-R 4,273,709,791.85
EDUCATIONAL SERVICES	471	-R 81,063,823.27
ELECTRICITY, GAS AND WATER	583	-R 261,615,811.24
FINANCING, INSURANCE, REAL ESTATE AND BUSINESS SERVICES	13678	-R 4,327,781,607.92
FOOD, DRINK AND TOBACCO	1630	-R 248,802,796.42
LEATHER, LEATHER GOODS + FUR(EXCLUDING FOOTWEAR + AND CLOTHING)	205	-R 20,001,623.97
MACHINERY AND RELATED ITEMS	1243	-R 304,557,104.71
MEDICAL, DENTAL AND OTHER HEALTH AND VETERINARY SERVICES	774	-R 218,844,178.05
METAL	437	-R 275,891,258.63
METAL PRODUCTS (EXCEPT MACHINERY AND EQUIPMENT)	529	-R 108,858,944.81
MINING AND QUARRYING	3990	-R 934,174,989.83
OTHER MANUFACTURING INDUSTRIES	719	-R 183,565,764.57
PAPER, PRINTING AND PUBLISHING	571	-R 98,998,679.73
PERSONAL AND HOUSEHOLD SERVICES	509	-R 177,524,560.34
PUBLIC ADMINISTRATION	236	-R 264,314,018.60
RECREATIONAL AND CULTURAL SERVICES	561	-R 75,341,201.10
RESEARCH AND SCIENTIFIC INSTITUTES	145	-R 24,340,885.13
RETAIL TRADE	4491	-R 707,260,203.27
SCIENTIFIC, OPTICAL AND SIMILAR EQUIPMENT	149	-R 60,521,555.14
SOCIAL + RELATED COMMUNITY SERVICES NOT ELSEWHERE SPECIFIED	785	-R 95,335,672.15
SPECIALISED REPAIR SERVICES	599	-R 94,216,037.19
TEXTILES	300	-R 62,412,722.77
TRANSPORT EQUIPMENT(EXCEPT VEHICLES, PARTS AND ACCESSORIES)	756	-R 338,988,730.81
TRANSPORT, STORAGE AND COMMUNICATION	3059	-R 757,966,821.77
VEHICLES, PARTS AND ACCESSORIES	1236	-R 240,996,838.88
WHOLESALE TRADE	3695	-R 1,740,906,434.94
WOOD, WOOD PRODUCTS AND FURNITURE	412	-R 46,556,690.16
Grand Total	78972	-R 22,543,742,184.65

The financing, insurance, real estate and business services accounts for the largest balance, followed by Agencies and other services, Wholesale Trade then Construction sector.

(2) SARS adopts a number of strategies to address the credit book backlog including but not limited to working overtime, repurposing of experienced staff to focus on audits and verifications, applying secondary risk tolerance and appetite based on taxpayer previous compliance track record and continued attempts to get taxpayers to comply with outstanding requirements in order to process refunds. SARS accepts that the balance of supply and demand is not always possible to maintain thereby leading to increase in inventory faster than the available capacity can handle. In this regard refinement of our risk approach is on-going.