Author: admin_kmos

Section 191 (TAA) – Refunds subject to set-off and deferral

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191.    Refunds subject to set-off and deferral

(1)     An amount refundable under section 190, including interest thereon under section 188(3)(a), must be treated as a payment by the taxpayer that is recorded in the taxpayer’s account under section 165, of an outstanding tax debt, if any, and any remaining amount must be set off against any outstanding debt under customs and excise legislation.

[Subsection (1) substituted by section 61 of Act 23 of 2015 and by section 39 of Act 33 of 2019]

(2)     Subsection (1) does not apply to a tax debt-

(a)     for which the period referred to in section 164(6) has not expired or suspension of payment under section 164 exists; or

(b)     in respect of which an instalment payment agreement under section 167 or a compromise agreement under section 204 applies.

(3)     An amount is not refundable if the amount is less than R100 or any other amount that the Commissioner may determine by public notice, but the amount must be carried forward in the taxpayer account.

Section 190 (TAA) – Refunds of excess payments

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190.    Refunds of excess payments

(1)     SARS must pay a refund if a person is entitled to a refund, including interest thereon under section 188(3)(a), of-

[Words preceding paragraph (a) substituted by section 60 of Act 23 of 2015 effective on 1 October 2012]

(a)     an amount properly refundable under a tax Act and if so reflected in an assessment; or

(b)     the amount erroneously paid in respect of an assessment in excess of the amount payable in terms of the assessment.

(2)     SARS need not authorise a refund as referred to in subsection (1) until such time that a verification, inspection, audit or criminal investigation of the refund in accordance with Chapter 5 has been finalised.

[Subsection (2) substituted by section 34(a) of Act 24 of 2020]

(3)     SARS must authorise the payment of a refund before the finalisation of the verification, inspection, audit or criminal investigation if security in a form acceptable to a senior SARS official is provided by the taxpayer.

[Subsection (3) substituted by section 34(b) of Act 24 of 2020]

(4)      An amount under subsection (1)(b) is regarded as a payment to the National Revenue Fund unless a refund is made in the case of—

(a)     an assessment by SARS, within three years from the later of the date of the assessment or the erroneous payment;

[Paragraph (a) amended by section 21(a) of Act 22 of 2018]

(b)     self-assessment, within five years from the later of the date the return had to be submitted or, if no return is required, payment had to be made in terms of the relevant tax Act or the erroneous payment was made; or

[Paragraph (b) amended by section 21(b) of Act 22 of 2018]

(c)     an erroneous payment claimed by a taxpayer within the period referred to in paragraph (a) or (b), but not paid by SARS within the period.

[Paragraph (c) added by section 21(c) of Act 22 of 2018]

[Subsection (4) substituted by section 53 of Act 44 of 2014 and by section 60(1)(b) of Act 23 of 2015]

(5)     If SARS pays to a person by way of a refund any amount which is not properly payable to the person under a tax Act, the amount, including interest thereon under section 187(1), is regarded as an outstanding tax debt from the date on which it is paid to the person.

[Subsection (5) substituted by section 71 of Act 39 of 2013 effective on 1 October 2012 and by section 60 of Act 23 of 2015 effective on 1 October 2012]

(5A)  If a person who carries on the ‘business of a bank’ as defined in the Banks Act, 1990 (Act No. 94 of 1990), holds an account on behalf of a client into which an amount referred to in subsection (5) is deposited, reasonably suspects that the payment of the amount is related to a tax offence, the person must immediately report the suspicion to SARS in the prescribed form and manner and not proceed with the carrying out of any transaction in respect of the amount for a period not exceeding two business days unless-

(a)     SARS or a High Court directs otherwise; or

(b)     SARS issues a notice under section 179.

[Subsection (5A) inserted by section 60 of Act 23 of 2015 and substituted by section 28 of Act 13 of 2017 effective on 18 December 2017]

(6)     A decision not to authorise a refund under subsection (1)(b) is subject to objection and appeal.

[Subsection (6) substituted by section 60 of Act 23 of 2015 effective on 8 January 2016]

Section 189 (TAA) – Rate at which interest is charged

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189.    Rate at which interest is charged

(1)     The rate at which interest is payable under section 187 is the prescribed rate.

(2)     In the case of interest payable with respect to refunds on assessment of provisional tax and employees’ tax for purposes of final assessment of income tax or of mineral and petroleum resources royalty paid for the relevant year of assessment, the rate payable by SARS is four percentage points below the prescribed rate.

[Subsection (2) substituted by section 33 of Act 24 of 2020]

(3)     The prescribed rate is the interest rate that the Minister may from time to time fix by notice in the Gazette under section 80(1)(b) of the Public Finance Management Act, 1999 (Act No. 1 of 1999).

(4)     If the Minister fixes a different interest rate referred to in subsection (3) the new rate comes into operation on the first day of the second month following the month in which the new rate becomes effective for purposes of the Public Finance Management Act, 1999.

(5)     If interest is payable under this Chapter and the rate at which the interest is payable has with effect from any date been altered, and the interest is payable in respect of any period or portion thereof which commenced before the said date, the interest to be determined in respect of-

(a)     the period or portion thereof which ended immediately before the said date; or

(b)     the portion of the period which was completed before the said date,

must be calculated as if the rate had not been altered.

Section 188 (TAA) – Period over which interest accrues

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188.    Period over which interest accrues

(1)     Unless otherwise provided in a tax Act, interest payable under section 187 is imposed for the period from the effective date of the tax to the date the tax is paid.

(2)     Interest payable in respect of the-

(a)     first payment of provisional tax, is imposed from the effective date for the first payment of provisional tax until the earlier of the date on which the payment is made or the effective date for the second payment of provisional tax;

[Paragraph (a) amended by section 32(a) of Act 24 of 2020]

(b)     second payment of provisional tax, is imposed from the effective date for the second payment of provisional tax until the earlier of the date on which the payment is made or the effective date for income tax for the relevant year of assessment;

[Paragraph (b) amended by section 32(b) of Act 24 of 2020]

(c)     the first payment under section 5(1) or 5A of the Mineral and Petroleum Resources Royalty (Administration) Act 2008 (Act 29 of 2008), is imposed from the effective date for the first payment until the earlier of the date on which the payment is made or the effective date for the second payment under section 5(2) or 5A of that Act for the relevant year of assessment; and

[Paragraph (c) added by section 32(c) of Act 24 of 2020]

(d)     the second payment under section 5(2) or 5A of the Mineral and Petroleum Resources Royalty (Administration) Act 2008 (Act 29 of 2008), is imposed from the effective date for the second payment until the earlier of the date on which the payment is made or the effective date for mineral and petroleum resources royalty under section 6(2) of that Act for the relevant year of assessment.

[Paragraph (d) added by section 32(c) of Act 24 of 2020]

(3)     Unless otherwise provided under a tax Act-

(a)     interest on an amount refundable under section 190 is calculated from the later of the effective date or the date that the excess was received by SARS to the date the refunded tax is paid; and

(b)     for this purpose, if a refund is offset against a liability of the taxpayer under section 191, the date on which the offset is effected is considered to be the date of payment of the refund.

Section 187 (TAA) – General interest rules

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187.    General interest rules

 

(1)     If a tax debt or refund payable by SARS is not paid in full by the effective date, interest accrues, and is payable, on the amount of the outstanding balance of the tax debt or refund-

[Words preceding paragraph (a) substituted by section 59 of Act 23 of 2015 effective on 1 October 2012]

 

(a)     at the rate provided under section 189; and

 

(b)     for the period provided under section 188.

 

(2) Interest payable under a tax Act is calculated on-

 

(a)     the daily balance owing; or

 

(b)     the daily balance owing and compounded monthly, which method of determining interest will apply to a tax type from the date the Commissioner prescribes it by public notice. 

 

(3)     The effective date for purposes of the calculation of interest in relation to-

 

(a)     tax other than income tax or estate duty for any tax period, is the date by which tax for the tax period is due and payable under a tax Act;

 

(b)     income tax for any year of assessment, is the date falling seven months after the last day of that year in the case of a taxpayer that has a year of assessment ending on the last day of February, and six months in any other case;

 

(c)     estate duty for any period, is the earlier of the date of assessment or 12 months after the date of death;

 

(d)     a fixed amount penalty referred to in section 210, is the date of assessment of the penalty, and in relation to an increment of the penalty under section 211(2), the date of the increment;

 

(e)     a percentage based penalty referred to in section 213, is the date by which tax for the tax period should have been paid;

[Paragraph (e) amended by section 59(1)(b) of Act 23 of 2015 and substituted by section 19 of Act 4 of 2026]

 

(f)      an understatement penalty, is the effective date for the tax understated;

[Paragraph (f) amended by section 59(1)(b) of Act 23 of 2015 and by section 31(a) of Act 24 of 2020]

 

(g)     an outstanding tax debt referred to in section 190(5), is the date of payment of a refund which is not properly payable under a tax Act; and

[Paragraph (g) added by section 59(1)(b) of Act 23 of 2015 and amended by section 31(b) of Act 24 of 2020]

 

(h)     an erroneous payment referred to in section 190(1)(b), is the date 30 days after the date that the payment was made.

[Paragraph (h) added by section 31(c) of Act 24 of 2020]

 

(4)     The effective date in relation to an additional assessment or reduced assessment is the effective date in relation to the tax payable under the original assessment.

 

(5)     The effective date in relation to a jeopardy assessment is the date for payment specified in the jeopardy assessment.

 

(6)     If a senior SARS official is satisfied that interest payable by a taxpayer under subsection (1) is payable as a result of circumstances beyond the taxpayer’s control, the official may, unless prohibited by a tax Act, direct that so much of the interest as is attributable to the circumstances is not payable by the taxpayer.

 

(7)     The circumstances referred to in subsection (6) are limited to-

 

(a)     a natural or human-made disaster;

 

(b)     a civil disturbance or disruption in services; or

 

(c)     a serious illness or accident.

 

(8)     SARS may not make a direction that interest is not payable under subsection (6) after the expiry of three years, in the case of an assessment by SARS, or five years, in the case of self-assessment, from the date of assessment of the tax in respect of which the interest accrued.

[Subsection (8) added by section 59 of Act 23 of 2015 effective on 8 January 2016]

Section 186 (TAA) – Compulsory repatriation of foreign assets of taxpayer

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186.    Compulsory repatriation of foreign assets of taxpayer

 

(1)     To collect an outstanding tax debt, a senior SARS official may apply for an order referred to in subsection (2), if-

 

(a)     the taxpayer concerned does not have sufficient assets located in the Republic to satisfy the tax debt in full; and

 

(b)     the senior SARS official believes that the taxpayer-

 

(i)      has assets outside the Republic; or

 

(ii)     has transferred assets outside the Republic for no consideration or for consideration less than the fair market value,

 

which may fully or partly satisfy the tax debt.

 

(2)     A senior SARS official may apply to the High Court for an order compelling the taxpayer to repatriate assets located outside the Republic within a period prescribed by the court in order to satisfy the tax debt.

 

(3)     In addition to issuing the order described in subsection (2), the court may-

 

(a)     limit the taxpayer’s right to travel outside the Republic and require the taxpayer to surrender his or her passport to SARS;

 

(b)     withdraw a taxpayer’s authorisation to conduct business in the Republic, if applicable;

 

(c)     require the taxpayer to cease trading; or

 

(d)     issue any other order it deems fit.

 

(4)     An order made under subsection (2) applies until the tax debt has been satisfied or the assets have been repatriated and utilised in satisfaction of the tax debt.

Section 185 (TAA) – Tax recovery on behalf of foreign governments

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185.    Tax recovery on behalf of foreign governments

(1)     If SARS has, in accordance with an international tax agreement, received-

(a)     a request for conservancy of an amount alleged to be due by a person under the tax laws of the other country where there is a risk of dissipation or concealment of assets by the person, a senior SARS official may authorise an application for a preservation order under section 163 as if the amount were a tax payable by the person under a tax Act; or

[Paragraph (a) substituted by section 58 of Act 23 of 2015 effective on 1 October 2012]

(b)     a request for the collection from a person of an amount alleged to be due by the person under the tax laws of the other country, a senior SARS official may, by notice, call upon the person to state, within a period specified in the notice, whether or not the person admits liability for the amount or for a lesser amount.

(2)     A request described in subsection (1) must be in the prescribed form and must include a formal certificate issued by the competent authority of the other country stating-

(a)     the amount of the tax due;

(b)     whether the liability for the amount is disputed in terms of the laws of the other country;

(c)     if the liability for the amount is so disputed, whether such dispute has been entered into solely to delay or frustrate collection of the amount alleged to be due; and

(d)     whether there is a risk of dissipation or concealment of assets by the person.

(3)     In any proceedings, a certificate referred to in subsection (2) is-

(a)     conclusive proof of the existence of the liability alleged; and

(b)     prima facie proof of the other statements contained therein.

(4)     If, in response to the notice issued under subsection (1)(b), the person-

(a)     admits liability;

(b)     fails to respond to the notice; or

(c)     denies liability but a senior SARS official, based on the statements in the certificate described in subsection (2) or, if necessary, after consultation with the competent authority of the other country, is satisfied that-

(i)      the liability for the amount is not disputed in terms of the laws of the other country;

(ii)     although the liability for the amount is disputed in terms of the laws of the other country, such dispute has been entered into solely to delay or frustrate collection of the amount alleged to be due; or

(iii)    there is a risk of dissipation or concealment of assets by the person,

the official may, by notice, require the person to pay the amount for which the person has admitted liability or the amount specified, on a date specified, for transmission to the competent authority in the other country.

(5)     If the person fails to comply with the notice under subsection (4), SARS may recover the amount in the certificate for transmission to the foreign authority as if it were a tax payable by the person under a tax Act.

(6)     No steps taken in assistance in collection by any other country under an international tax agreement for the collection of an amount alleged to be due by a person under a tax Act, including a judgment given against a person in the other country for the amount in pursuance of the agreement, may affect the person’s right to have the liability for the amount determined in the Republic in accordance with the relevant law.