THE SOUTH African Revenue Service (Sars) plans to crack down on the construction sector, which had a R4.7 billion in outstanding tax debt in the 2010/11 fiscal year, and has been identified as the least tax-compliant economic sector in the country.

More than R2.6bn of the outstanding tax debt relates to VAT, with corporate income tax making up about R1.06bn and pay as you earn (PAYE) R972.7m. Sars says the industry’s tax compliance record is characterised by higher rates of outstanding returns and inaccurate declarations than in other sectors. Its tax compliance programme document which, was launched in April 2012, said audits showed that the construction industry under-declared PAYE by 50 percent and corporate income tax by 61 percent.

In addition, 64 percent of corporate income tax returns, 36 percent of VAT returns, and 28 percent of PAYE returns were not filed on time, while more than half of corporate income tax and VAT payments were made late. VAT under-declaration in the construction industry is of serious concern, where almost 70 percent of audited cases reveal incorrect disclosures. Sars says that its assessment suggests that the biggest risks lie in the small and medium business segments, and particularly in contractors and sub-contractors involved in paving, painting, decorating, plumbing, wall and floor tiling, heating and ventilation, and ceilings and flooring.

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