In the past, complying to tax laws has often been at the will of the tax advisor or the taxpayer. It has been a moral decision as to whether income is honestly declared or not. The problem with this is that so much is rooted in the attitude towards compliance. Often high tax rates are seen as unfair and by finding tax loopholes, the taxpayer feels that they are leveling the playing field. The irony of this is that the more tax is evaded, the higher the tax rates become for everyone.

Over the last few years, SARS has been making an intelligent drive towards better tax compliance.

They started by combating these negative attitudes towards high tax rates by lowering the tax rate across the board. This meant that more individuals started honestly fulfilling their tax responsibilities.

In order to start better enforcing tax compliance, SARS made a clever shift with the advent of eFiling. Instead of assessing taxpayers, they now had taxpayers self-assessing themselves, freeing up SARS resources to focus on investigations.

Now, SARS not only had the resources to investigate tax evasion, they had developed special software to pinpoint investigative efforts. This powerful software automatically collects and scans information from a number of different sources including your bank accounts, property sales and purchases, motor vehicle purchases, investments, VAT refunds and more. This paints an accurate picture of the net worth of a company or individual. Therefore if the income you are declaring doesn’t match your spending, a red flag is raised and an investigation will follow.

Combining this level of national data collection with new global standards being developed by the OECD (Organisation for Economic Co-operation and Development) for international information sharing, and it means that no person or business can avoid tax compliance. In short, if you are still making use of tax loopholes to save yourself money, it is just a matter of time before you are caught out and face stiff fines and the possibility of criminal prosecution.

With this new understanding, are you or your business tax compliant? Are you aware of whether your tax advisor or accountant is conducting your tax affairs in a compliant manner? With Dirmeik Consulting, you can rest assured that we will always keep you and your business tax compliant and avoid the unnecessary risk, stress and penalties associated with non-compliance. Call us today to find out more. Phone 021 421 4444.