Go-ahead for SARS probe

Finance Minister Pravin Gordhan has given tax ombudsman Bernard Ngoepe the go-ahead to conduct a systemic investigation into the South African Revenue Service.

Ngoepe requested the probe after receiving a high number of complaints relating to delays by the tax agency in paying refunds to taxpayers.

SARS earlier said this was an unintended consequence of efforts to fight fraud.

However, the Institute of Tax Professionals said that delaying refunds amounted to the state borrowing money from taxpayers.

The Institute of Chartered Accountants said taxpayers' frustration stemmed from "deferral procedures" that did not seem to adhere to standard procedures.

This had resulted in multiple requests for verification documents, multiple requests for bank detail confirmations, and refunds being withheld for audits on other tax matters.

SARS said "a number of cases" of criminal activity resulted in profiles being "maliciously" used and bank details being changed. This was detected "during the early phases" of the 2016 filing season, which started in July. This resulted in refunds being withheld.

In its statement this week, SARS said: "The office of the tax ombudsman and the Ministry of Finance can be assured of full co-operation from SARS during the investigation. It is in the interest of SARS and the public to finally find closure and finality to this issue."

SARS said it remained confident its systems and processes were strong and robust. Spokesman Sandile Memela said SARS was determined to ensure that its systems and processes were "simplified" to allow South Africans to meet their tax obligations.

"Much of the current taxpayer complaints pertain to VAT refunds. SARS has an obligation to ensure both service and compliance, which includes complying with the legislation and ensuring that all incorrect activities are managed correctly, which could include fraud," he said.

SARS initially denied there was an increase in delays paying refunds. However, it then said that the increase in fraud had forced it to tighten its "risk rules".

It said it had referred 11% of its cases for a detailed audit and that 98.2% of its personal income tax payments were paid within 72 hours.