SARS issues guidance on how to apply for relief to defer tax payments without incurring penalties

The South African Revenue Service (SARS) has, via a new webpage, issued guidance on how to apply on a case by case basis for relief to defer tax payments without incurring penalties. Broadly, the following channels must be used:

• Large businesses with gross income of more than R100 million may apply to defer tax payments without incurring penalties by emailing their application to COVID19IPAaboveR100m@sars.gov.za; and
• Businesses with gross income of R100 million and less that wish to apply for additional relief (over and above the automatic relief provided) may do so by emailing their application to COVID19IPAbelowR100m@sars.gov.za.

Taxpayers with gross income of R100 million and less may defer the payment of a portion of Pay As You Earn and provisional tax liabilities if the requirements set out in the Revised Draft Disaster Management Tax Relief Administration Bill are met. Taxpayers who qualify for the deferral of tax payments in terms of these provisions do not need to apply to SARS for the deferral of such payments. Additional relief may be applied for by these taxpayers using the SARS online platform mentioned above, and will be considered by SARS on a case by case basis.

Taxpayers who do not qualify to defer the payment of tax debts as set out in the Revised Draft Disaster Management Tax Relief Administration Bill and taxpayers who seek additional relief may apply to SARS to settle tax debts in instalments in the following circumstances:

• Serious financial hardship is experienced by the taxpayer as a result of the COVID-19 pandemic;
• The effects of the hardship must be material and significant; and
• The taxpayer must prove that an instalment payment agreement is required, i.e. the taxpayer must prove that it is not able to settle its tax debts otherwise.

Any application made to SARS for such relief must include the following documentation:

• A letter stating the reasons for the request and the specific tax periods concerned.
• Latest annual financial statements and management accounts.
• A list of debtors and creditors.
• Cash flow projections for the next three months.

The Revised Draft Disaster Management Tax Relief Administration Bill and Revised Draft Disaster Management Tax Relief Bill were released for public comment on 1 May 2020. Commentary is due by close of business on 15 May 2020.

Need help? Connect with our Africa Tax & Legal Technical Council at zataxandlegaltech@deloitte.co.za.