BUSINESS NEWS - The investigation by the Office of the Tax Ombud into the delay of refunds from the tax authority has borne fruit.
Finance minister Tito Mboweni announced in his maiden medium-term budget policy statement that R20 billion in value-added tax (Vat) refunds will be paid to taxpayers.
The additional refunds comprise R11 billion to clear the backlog (refunds withheld) and another R9 billion to provide for the current fiscal year (2018/19).
“We recognise that this has hurt the cash flow of a number of companies, including small businesses,” he said in Parliament.
The Ombud found in a scathing report that the South African Revenue Service (Sars) has, in some instances, been unduly delaying the payment of valid refunds, causing financial hardship.
Despite this report, the number of complaints about the non-payment of refunds still tops the list of complaints received by the Office of the Tax Ombud. It has received more than 800 complaints, representing almost 35% of all complaints.
Dispute resolution
Another issue that has been causing grave concern is the time it takes to solve disputes with the tax authority.
The Ombud has recently received approval from the finance minister to investigate the reasons for Sars’s non-compliance with time frames set out in the Tax Administration Act.
In the 2017/18 Tax Ombud Annual Report, complaints about non-compliance with dispute resolution time frames rank second highest, with 700 complaints accepted for investigation. This represents almost 30% of all the complaints received.
Taxpayers who have been battling with Sars on delays in the dispute process can now directly approach the Office of the Tax Ombud to act on their behalf against the tax authority.
When complaints by taxpayers are recognised by the Tax Ombud as being systemic, taxpayers no longer have to exhaust all avenues before approaching the Ombud for assistance.
Joon Chong, tax partner at law firm Webber Wentzel, says the dispute resolution process has also become quite unfair, mainly because of the time and money it takes to finalise a dispute.
