As a taxpayer in South Africa, you may wonder why you should bother to comply with the tax laws and regulations. After all, paying taxes can be a hassle and a burden, especially if you are struggling financially. That said, being tax compliant has many benefits that can outweigh the costs and inconveniences. Here are some of the top reasons why you should be tax compliant in South Africa:
1. You can avoid penalties and interest. If you fail to register as a taxpayer, file your tax returns on time, or pay your tax liabilities, you may face severe consequences from SARS. You could be charged with penalties and interest on the outstanding amounts, which can accumulate quickly and increase your debt. You could also face criminal prosecution and imprisonment for tax evasion or fraud. Being tax compliant means that you stay within the law and avoid these risks.
2. You can apply for tax clearance certificates. A tax clearance certificate is a document that confirms that you are in good standing with SARS and have no outstanding tax obligations. You may need a tax clearance certificate for various purposes, such as applying for tenders, investing abroad, emigrating, or proving your good reputation. To obtain a tax clearance certificate, you need to be tax compliant and request it through the Tax Compliance Status system on eFiling.
3. You can invest in vehicles exempt from capital gains tax (CGT). Capital gains tax is a tax that you pay on the profit you make when you sell an asset that has increased in value. However, some investment vehicles are exempt from CGT on the disposal of their underlying assets. These include qualifying Collective Investment Schemes (CISes) and Real Estate Investment Trusts (REITs). By investing in these vehicles, you can enjoy the benefits of capital growth without paying CGT.
4. You can contribute to the development of the country. Paying taxes is not only a legal obligation but also a civic duty. By paying your fair share of taxes, you help the government to provide essential services and infrastructure to the citizens of South Africa. These include health care, education, housing, roads, water, electricity, and social grants. You also help the government to fund big projects that boost the economy and create jobs, such as hosting international events or bidding for scientific research.
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Sources:
– Tax Compliance – SA Institute of Taxation
– How to become tax compliant in South Africa | TaxTim Blog SA
– 5 Tax benefits every CFO needs to know about · CFO South Africa