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Tax Penalties
Taxpayers who do not pay the correct amount of tax (or don’t pay at all) will inevitably face tax penalties. They vary between 5% and 200% of tax not paid or short paid. Tax penalties fall into one of four categories:
- Percentage based penalties. SARS impose this tax penalty for late payment of tax (amongst others);
- Fixed amount penalties. SARS impose this tax penalty for late submission of a tax return;
- Reportable arrangement penalties. SARS will impose this tax penalty for not reporting a Reportable Arrangement; and
- Understatement penalties. SARS will impose this tax penalty in addition to the above tax penalties under certain circumstances.
Often, however, SARS impose tax penalties incorrectly. Other times, they impose them correctly. SARS may nevertheless remit a tax penalty. If SARS still does not remit a tax penalty, the taxpayer can submit an objection.
Taxpayers must adhere to strict rules to have any chance of getting a tax penalty remitted or an objection won. Tax law associated with the remittance of penalties and submission of objections is complex (see book authored by our founder, Nico Theron titled: Practical Guide to Handling Tax Disputes, published by Lexis Nexis).
Taxpayers can avoid some tax penalties altogether under certain circumstances. This result follows from a successful Voluntary Disclosure Program (VDP) application.
Getting SARS to remit a tax penalty or allow an objection is difficult. The VDP rules are also difficult to understand and execute correctly without experience. We are niche tax experts at the very forefront of tax law. We have saved taxpayers millions in tax penalties through remission requests, objections, and VDP applications. Contact us to hear how we can help in your case. There are various penalties (late payment penalties, underestimation penalties, fixed amount penalties, understatement penalties) that SARS may impose on a taxpayer under various circumstances. These penalties may, however, be waived by SARS if the correct procedure is followed and the correct legal arguments advanced for remission/waiver.
Contact us for assistance, either to avoid the penalty being imposed or challenging the penalty through one or more dispute resolution mechanisms.