The South African Revenue Service (SARS) says that it will be tightening its VAT registration processes after it detected an “unusually high number of suspicious VAT registrations”.
SARS said it noticed a trend of suspicious registrations by VAT vendors. In the month of April, specifically, it saw a significant spike that required it to conduct an urgent review of its registration process.
“A key strategic objective and design principle of our administration platform is to provide ease of registration. This must be balanced with the risk of abuse and attempts by individuals to obtain a VAT number and claim fraudulent refunds,” it said.
“We were alerted by our sophisticated risk engine that there was an unusual increase in the number of registrations, all of which were suspicious. Our analysis suggests that large numbers of these registrations are being created with the intent to defraud SARS and, by implication, honest taxpayers.”
As a result of these observations in VAT registrations, and the increase in the potential for fraud, the following is to be implemented with immediate effect:
- All new applications for VAT registration will be subjected to a more stringent registration process which could include the requirement that the applicant present themselves, in person, to the branch closest to where the business enterprise is located for validation and accreditation.
- Where applicants are expected to visit a branch, the visit must be pre-booked on the SARS website, by clicking on the “Book an Appointment” icon.
- All supporting documents that are required for registration validation must be submitted at the branch on the day of the appointment.
- VAT registration will only be effected when SARS has satisfied itself that the application is lawful.
SARS said it is ready to pursue criminal charges against these perpetrators.
“Those that steal from the fiscus simply increases the overall tax burden on the rest of us who honestly pay our taxes,” it said.
The revenue service said it is committed to paying legitimate refunds to qualifying taxpayers as and when they become due. In line with this commitment, in the 2022/23 financial year, a record R381 billion in refunds were paid, of which R319 billion were VAT refunds.
SARS commissioner 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. Furthermore, I wish to apologise to honest taxpayers for the inconvenience that this may cause.”
“SARS is a critical institution in nation-building and strengthening our democracy by discharging its responsibility of collecting revenue, improving compliance, and facilitating legitimate trade to help build a capable state. SARS carries out this mandate without fear, favour or prejudice.”