DA to provide Tax ombud with information about SARS refund delays

The DA has written to the Tax ombud, Judge Bernard Ngoepe, to provide him with information we have received from parliamentary questions about outstanding VAT and diesel refunds.
On 28 February 2017, the total amount of outstanding VAT refunds was R19.6 billion.
This represents a staggering increase of R 1.5 billion from the previous year, or 8% increase in the value of outstanding refunds.
It is shocking that 43 650 or 15% of a total of 343 674 claims submitted were outstanding as on 28 February 2017.
Moreover, of the 43 650 outstanding claims, it is worrying that 42% were outstanding for more than 2 months.
There was also an increase of 42% of refunds being audited.
It is indeed these audits that are at the heart of the problem.
They are either abused to, or unintentionally create, delays in refunds that result in huge cash flow problems and thus economic growth inhibitors.
It is astounding that there are VAT refunds that are 10 to 12 months overdue.
The impact on the businesses involved will have been very serious and there may well be some of the affected businesses that have been forced into liquidation or at very least out of business.
VAT vendors act as collection agents for SARS.
Businesses and small businesses in particular, have used their own cash to pay VAT on their purchases and it is morally wrong for SARS to in any way delay refunding them the very cash that they need to pay wages and to keep the business and jobs going.
It is immoral for VAT audits to be abused to meet SARS revenue income targets and if the Tax Ombud finds evidence of this sort of unethical behaviour the DA will demand that disciplinary action be taken against both those who made such policy decisions as well as those who participated in the implementation of them.
The DA is concerned that the R19.6 billion in outstanding claims could place serious strain on the national cash balances.
These cash balances, according to the provisional financing figures published by National Treasury, amounted to R210.77 billion.
This means that about 10% of the cash on hand would need to be used to refund the full amount of outstanding VAT refunds which would place the cash balances, over and above the normal monthly expenditure of the government, under severe pressure.
In addition to the referral of tax data to the Tax Ombud, the DA will take the following action to ensure that action is taken to resolve the delays in VAT refunds and thus the negative impact on economic growth and job creation:
• We will probe the SARS delegation robustly during the SARS appearance before the Standing Committee on Finance on the 28th of March 2017;
• We will submit a written question to the Minister of Finance to establish what the impact on the countries cash resources and ability to pay State employee salaries, expenses and capital infrastructure costs would be should the full backlog of VAT refunds have to be paid out.
Earlier this week, we welcomed the announcement by Judge Ngoepe that he will investigate the failures at the South African Revenue Services (SARS) that cause these reported delays in tax refunds.
However, it is imperative that the R19.6 billion be refunded and the DA questions whether SARS is currently in a position to do so.
The DA continues to urge Judge Ngoepe to efficiently and effectively investigate the failures at SARS so that they can resolve what is clearly a serious problem for business, economic growth and job creation.