SARS cracks down on fraudulent VAT registrations: Introduces stricter measures to protect taxpayers
With a record R381bn in refunds paid in the last financial year, SARS is taking immediate action to protect honest taxpayers and maintain the integrity of the tax system.
The South African Revenue Service (SARS) has detected an alarming increase in suspicious VAT registrations, raising concerns about potential fraud and its implications for taxpayers. SARS issued a statement on 11 May 2023. Read the full statement here.
Surge in suspicious registrations
In April alone, SARS observed an unprecedented surge in suspicious registrations, prompting an urgent review of its registration process. While SARS aims to provide an easy registration experience, it recognizes the risk of abuse and fraudulent refund claims. Sophisticated risk analysis highlighted a significant number of registrations with clear intent to defraud SARS and, in turn, burden honest taxpayers.
To combat this growing issue, SARS is implementing stricter measures, effective immediately:
Enhanced registration process: New applications for VAT registration will undergo a more rigorous procedure, potentially requiring applicants to present themselves in person at the nearest SARS branch for validation and accreditation.
Pre-booking appointments: Applicants expected to visit a branch must pre-book their appointment through the SARS website using the "Book an Appointment" feature.
On-Site document submission: All necessary supporting documents for registration validation must be submitted in person at the branch on the scheduled appointment day.
Stringent approval process: VAT registration will only be granted once SARS has thoroughly verified the lawfulness of the application.
Pursuing criminal charges
Recognising the severity of the situation, SARS is prepared to pursue criminal charges against those involved in fraudulent activities. Perpetrators who steal from the fiscus ultimately increase the tax burden on honest taxpayers.
SARS Commissioner, Mr. Edward Kieswetter, issued a stern warning to those engaged in these schemes: “SARS is augmenting its human effort using data insights, artificial intelligence and machine learning algorithms to enhance its capability to identify those engaged in criminal activity. Those who underestimate our resolve, do so at their own peril.”
As a critical institution in nation building, SARS is determined to fulfill its responsibility of collecting revenue, enhancing compliance, and facilitating legitimate trade. The agency carries out its mandate without fear, favor, or prejudice.
The new measures introduced by SARS aim to safeguard taxpayers' interests and reinforce the trust in the tax system. By proactively addressing fraudulent VAT registrations, SARS is taking a significant step toward protecting both taxpayers and tax practitioners from potential financial harm and ensuring a fair and equitable tax environment for all.
