The most recent data from the South African Revenue Service (SARS) indicate that undisputed tax debts have reached a record high of nearly R500 billion, with Value-Added Tax (VAT) being the primary concern.
The most recent SARS Debt Collection Data from December 2025 shows a total of R63 billion in cash collected from debt, thus far.
SARS are ahead of their collection targets to achieve R100 billion in cash collections from debt from April 2025 to March 2026.
However, there is still a R20 billion shortfall against its revenue collection goal of R35 billion in additional revenue for the 2025/26 financial year.
Despite SARS’s strong stance on making non-compliance complex and costly, cash collections are still significantly short of the undisputed debt book, which stands at close to R489 billion.
Jashwin Baijoo, Partner and Head of Strategic Engagement & Compliance at Tax Consulting SA, noted that VAT is the highest contributor to the undisputed debt book.
VAT is South Africa’s second-largest source of revenue, accounting for R457.8 billion of government revenues in 2024/2525, only behind personal income tax, which accounted for R733.2 billion.
There are approximately 900,000 VAT vendors in the country, with nearly 500,000 of them being active.
Baijoo stated that non-compliant businesses must be aware that the imputation of personal liability is already enshrined in South Africa’s tax laws.
This means that an individual can be held personally liable for a business’s failure to comply with tax laws.
This can apply to any person involved in the management of the company’s overall financial affairs, where their negligence or fraud resulted in the company’s failure to pay its tax debts.
“The tax laws do not specifically presuppose the existence of formal responsibility in respect of the finances of the company,” said Baijoo.
“They instead merely require that a person exercise a degree of control over or regular involvement with its overall financial affairs.”
Section 180 of the Tax Administration Act (TAA) means that personal liability can also be extended to shareholders, directors, and other persons who were factually involved.
Baijoo noted that contravention of tax laws not only harms an individual or company’s reputation but can also result in substantial financial penalties, legal repercussions, and potential imprisonment.
Criminal proceedings possible
Baijoo further warned that Section 234 of the TAA states that SARS can see omissions as criminal offences for non-compliance with tax Acts.
“This section further states that any person who willfully commits one of the listed acts, or willfully/negligently fails to act, may be liable, upon conviction, to a fine, or imprisonment of up to 2 years.”
“This is only the tip of the iceberg, however, as Section 235 of the TAA goes even further, speaking to tax evasion and obtaining undue refunds through fraud or theft. This comes with a 5-year potential imprisonment.”
However, taxpayers who have unpaid tax debts can approach the revenue collection authority for relief.
The TAA has measures for a taxpayer who lacks legal merit to pursue an objection with SARS but struggles to pay their debts.
For instance, a Compromise of Tax Debt application is designed to help taxpayers reduce their tax liability through an agreement with SARS.
“Where SARS is approached correctly, and the taxpayer’s financial circumstances warrant it, a tax debt can be reduced, and the balance paid off in terms of the Compromise,” said Baijoo.
“In the end, total tax compliance is the ultimate goal, be it through the rectification of an error by SARS or securing a settlement which is more affordable to the taxpayer in a given instance.”
Source: BusinessTech