[Opinion] SARS red tape is killing business

[Blurock]

The mission statement of SARS reads "to facilitate trade and to enlist new tax contributors"...

Well, they are not facilitating my business, they are actually harming my business. We have jumped through hoops since July, but still no VAT number.

Not having a VAT number means that you can not trade effectively as people see you as Mickey Mouse or a fly-by-night. All the registrations you have to do for a new business requires a VAT number.

As a manufacturer with a potentially high turnover, our VAT registration is not voluntary, but compulsory. So why the hold up? They are drowning us in red tape "because of all the tax fraud". Well, don't make your problem my problem. Choose a better government that will stamp out corruption and train an effective police force to catch the criminals.

Bloody bureaucrats!

As an example: As proof of address, we provide SARS with a letter from the landlord, an invoice and statement showing a few months history of paying rent and bank statements showing the rent paid. No, this is not good enough, they want a signed copy of ALL the pages of the lease agreement. That's the rule and that is what they want. Stuff you, stuff the environment, stuff the trees required to print almost 30 pages.

[Justloadit]

Have they got qualified personnel that can EVEN validate that it is a genuine lease or correct paperwork?
No wonder there is tax fraud, the werkers at the department only got 30% at school, now they are supposed to regulate beeg industry........

[Blurock]

I suppose our VAT application is now gathering dust in someone's office and in 6 month time we'll have to re-apply because it would get lost under all the new applications being dumped on the pile...

[Dave A]

The process for VAT registration is going to be "improved", unfortunately only effective next year. I am given to understand that voluntary registrations will still have to jump through hoops, but mandatory registrations should be a lot simpler than under the current regime.

As part of the trade-off, there'll be no VAT refunds if your input VAT claimed happens to exceed your output VAT in any period (the area where all the fraud was happening, obviously). Instead, you will have to use the credit to offset against future returns.

[Justloadit]

As part of the trade-off, there'll be no VAT refunds if your input VAT claimed happens to exceed your output VAT in any period (the area where all the fraud was happening, obviously). Instead, you will have to use the credit to offset against future returns.

This is all good and well, but if you export most of your manufactured items, then the input VAT will always exceed the output VAT, which means you will never get your money back then, which may be my case in the future, which is my profit.

[CLIVE-TRIANGLE]

Justloadit if common sense prevails (I know, I know...) the withholding will only happen when taxable supplies are less than inputs. Exports are taxable supplies at zero rate. At least that's how you and I would implement it ...

[Dave A]

Justloadit if common sense prevails (I know, I know...)

or perhaps they'll only go into "let's get a tree's worth of paperwork" mode in situations like that, where a refund is definitely going to have to be paid because it's an ongoing situation.

At the moment they're interrogating everyone beyond reasonableness regardless of the situation. Ultimately it makes sense that they have all the extra hoops in place only for where it's needed.

AFAIK, the main problem has been pretty much a hit and run scenario - the company registers for VAT, makes a massive claim for capital inputs, gets a big refund on the first return, then disappears.

[Blurock]

The archaic rules and red tape frustrates even their own staff. I must say that the queue management is effective. Most of the (junior?) staff that I dealt with was pleasant and helpful, but they are also bound by the (stupid) rules. The decision makers hide behind their files and are not approachable (or accountable?).

Pardon the ranting, but I am so frustrated and pissed off

[Justloadit]

Justloadit if common sense prevails (I know, I know...) the withholding will only happen when taxable supplies are less than inputs. Exports are taxable supplies at zero rate. At least that's how you and I would implement it ...

Hi Clive,

But will that be SAR's interpretation?

[CLIVE-TRIANGLE]

Hi Clive,

But will that be SAR's interpretation?

Sanity does on occasion prevail. Trust me, I share these frustrations daily.

There are various classes of entities that are regularly in a refund position. Farming companies are an example that are in a refund position 4 cycles out of 6. To make it worse, their diesel rebates are coupled to their VAT position and it's difficult to imagine that they would be held to ransom in this way. Similarly developers who have input vat on almost everything bar labour, and can only expect to make taxable supplies in 12 months time, or worse. We can but wait and see (and quite possibly howl in despair).

[Mike Simmonds]

As an example: As proof of address, we provide SARS with a letter from the landlord, an invoice and statement showing a few months history of paying rent and bank statements showing the rent paid. No, this is not good enough, they want a signed copy of ALL the pages of the lease agreement. That's the rule and that is what they want. Stuff you, stuff the environment, stuff the trees required to print almost 30 pages.[/QUOTE]

Do you have a lights and water account from the municipality? Is it in the name of the company? The Gauteng SARS offices are now insisting on using the CRA01 form http://www.sars.gov.za/AllDocs/OpsDo...nal%20Form.pdf which has made the process a bit easier in most cases. If the municipal account is in the name of the landlord then the landlord can complete this form and provide a copy of his ID.

[Blurock]

As an example: As proof of address, we provide SARS with a letter from the landlord, an invoice and statement showing a few months history of paying rent and bank statements showing the rent paid. No, this is not good enough, they want a signed copy of ALL the pages of the lease agreement. That's the rule and that is what they want. Stuff you, stuff the environment, stuff the trees required to print almost 30 pages.

Do you have a lights and water account from the municipality? Is it in the name of the company? The Gauteng SARS offices are now insisting on using the CRA01 form http://www.sars.gov.za/AllDocs/OpsDo...nal%20Form.pdf which has made the process a bit easier in most cases. If the municipal account is in the name of the landlord then the landlord can complete this form and provide a copy of his ID.

[/QUOTE]

No, not accepted in the Durban or Umhlanga offices. You will abide by our rules andf that is it!

[Blurock]

We have now finally received our VAT number, after escalating it to SARS Service Monitoring Office (SSMO) ssmo@sars.gov.za. The branch was given 15 days to sort out the registration, but it took them 3 weeks! They never requested further information, had no follow up interviews or even visited our premises. So was the delay out of spite or incompetence?

In the initial application, the VAT101 was only captured on the SARS systems 33 working days after the actual acknowledgement of the receipt. This is in spite of follow up letters and visits to SARS to find out if they actually required any other supporting documentation to finalise the registration. Call centre enquiries stated only that the application is supposedly “In Progress”.

This the SARS Vision Statement:

SARS is an innovative revenue and customs agency that enhances economic growth and social development that supports the country’s integration into the global economy in a way that benefits all South Africans.

In my opinion they are not living up to their vision. We are a manufacturing concern creating meaningful direct and indirect employment. We are replacing imports which saves the outflow of revenue. We will soon be exporting, which will generate additional revenue. The almost 3 months it took to register a COMPULSORY VAT registration, harmed our business and delayed our marketing efforts. We could not register on supplier data bases as no-one will deal with a manufacturer that does not have a VAT number. It is also impossible to tender for any work without a VAT number.

We were placed at a price disadvantage to our competitors as we could not claim back any input VAT. We had to also delay staff employment as we could not go into full production foregoing our input VAT on raw materials etc.

Do we now blame foreigners for not investing here? Why do we have to put up with this?

[Justloadit]

I heard on 702 radio last night, that a Judge has been appointed to act as an ombudsman on SARS matters

[Peter Johns781]

It is understandable when looking at it from your point of view but what about theirs? The red tape might possibly be the best way to sort through legitimate and illegitimate people. Besides, policy is policy, as my boss usually says!