SARS is thinking of hiring what’s known as tax soldiers to “hunt down” small businesses not paying tax

By Evan Pickworth:

In an effort to catch more small businesses in the tax net, South African tax authorities may implement the idea of “tax soldiers”, recently employed in Uganda.

Without saying whether this would be policy or not, Tax Commissioner Oupa Magashula, said during an Ernst & Young tax conference in Mpumulanga, that it formed part of the debate on how best to bring smaller businesses into the fold.

These “tax soldiers” would go out and into small businesses, look at the books and inventory and general condition of the store and make an assessment on the spot.

“Simplification is the way to go,” said Magashula.

He said the idea of a turnover tax as applied in South Korea was also being looked into – where a once-off amount is charged when a small company purchases stock.

“We are looking at that and want to come up with one simple tax for small and medium-size businesses.”

But he readily acknowledges a “one-size fits all” approach would not work, which is why Revenue is preparing compliance for different segments.

He says taxing small business is thus a very difficult task, but the biggest challenge is registration.

He says Revenue will be working with other government departments, like Home Affairs and the companies registrar. “It is not just a tax issue,” he said in answer to a question from I-Net Bridge.

A Finscope study last week found there were six million small businesses across South Africa employing 200 or less people, but only 17 were registered. Yet this segment could add over 50% to GDP.

About Quintin