The SA Revenue Service has revealed that some state entities are not complying with their statutory obligations to pay tax. Picture: Motshwari Mofokeng/Independent Newspapers
THE SA Revenue Service (Sars) is owed R2.63 billion in unpaid taxes by state-owned entities (SOEs) reporting to the national government, the tax collection agency has revealed.
This comes as the government battles to timeously pay its suppliers nearly R10bn in unpaid invoices due to budget constraints, among other reasons it cites for the non-payment.
Information obtained by the Sunday Independent shows that the total outstanding debt for national public entities across all taxes amounted to R2.63bn.
In documents presented to the National Treasury’s Chief Financial Officers’ Forum on the state of compliance last month, Sars broke down the outstanding taxes as R1.715bn in value-added tax (VAT), R710 million in pay-as-you-earn (PAYE), R209m in PAYE additional assessments, and VAT additional assessments amounting to R 2.29m.
According to the agency, in total there were seven returns outstanding, and these related to income tax; therefore, the exact tax liability remains unknown.
In October, during the medium-term budget policy statement, Finance Minister Enoch Godongwana set Sars a revised tax revenue collection target of R1.84 trillion.
Sars stated that the country was reliant on collecting taxes, outstanding taxes, and encouraging voluntary compliance, as this allowed for funds to be distributed to government departments to address citizens’ needs.
The agency warned that when targets are not met due to non-compliance, it impacts funding and inevitably negatively impacts the most vulnerable citizens.
“All taxpayers, including government institutions, play a very important role in Sars achieving its revenue target,” the entity explained.
Details of the debt owed to Sars come as the Treasury has indicated that in the three months to the end of September, national and provincial government departments paid 110 527 invoices to the value of R7.9bn after the required 30 days.
Provincial government departments paid more than R7.13bn late, while national departments were responsible for R753m.
In addition, 89 369 invoices older than 30 days were not paid by national and provincial departments at the end of the second quarter of the 2024/25 financial year (July to September 2024), and these amounted to R9.7bn, with provinces responsible for just over R9.412bn.
The 89 369 unpaid invoices between July and September 2024 represent a regression of 82%, or 40 278 invoices compared to the end of the first quarter of 2024/25 (March to June 2024), which stood at 49 091 invoices.
In monetary terms, at R9.7bn, invoices older than 30 days and not paid by national and provincial departments in the second quarter of 2024/25 equate to a regression of 47% or R3.1bn compared to R6.6bn in the first quarter.
Treasury said the common reasons provided by national and provincial departments for late or non-payment of invoices in the second quarter of 2024/25 include inadequate budgets and cash blocking, challenges with the government’s financial systems BAS (basic accounting system) and LOGIS (logistical information system), as well as the central supplier database.
Departments also blamed high accruals from previous financial years, disputed invoices with suppliers, unresolved supply chain management (SCM)-related challenges, internal control deficiencies, inadequate internal capacity, late processing and authorisation of invoices, and misfiled, misplaced, or unrecorded invoices.
Analysis of the figures also shows the health sector is the main contributor towards the late and/or non-payment of invoices at the provincial level.
Last week, the Gauteng provincial government said it had successfully paid 96% invoices from the township suppliers within 30 days and further improved from 49% to 77% in paying suppliers within 15 days.
“Four departments achieved 100% compliance, while three departments achieved above 90% compliance,” it said, adding that late payments can have a negative impact on the economy and lead to small, micro and medium enterprises (SMMEs) closing and workers not receiving their salaries
Last month, the Gauteng health department came under fire after it emerged that it owed 69 suppliers R743m, with at least one company, Curved Business Solutions, which was owed R5.4m, cutting off its services.
The National Treasury has told departments that their late and/or non-payment of invoices within 30 days continues to severely impact the sustainability of SMMEs.
Additionally, most reasons provided for late and/or non-payment of invoices relate to internal control deficiencies in departments that appear to be recurring without being addressed.
The Public Service Commission (PSC) this week expressed its concerns about the non-payment of invoices within 30 days in violation of the Public Finance Management Act.
The PSC undertook to further engage the National Treasury’s Office of the Accountant-General on mechanisms to ensure consequence management against accounting officers (directors-general and heads of departments) who fail to pay service providers within 30 days upon receipt of an invoice, particularly after making queries.
Meanwhile, Treasury has issued another cautionary notice to departments, municipalities, other state entities, and components that between December 16 and January 10 next year, advertising, publishing, and closing of bids should not be done unless relating to emergencies in terms of the applicable SCM prescripts.
On November 20, acting director-general Shabeer Khan noted that during this period many suppliers, service providers, and other industries are closed and unable to respond to advertised bid opportunities.
“National Treasury has experienced a flood of allegations of misconduct relating to the above-mentioned practices during this period.
Advertising, publishing, and/or closing of bids during this period have been questioned, and they have compromised the principles of transparency and fairness, amongst others,” wrote Khan, warning that such practices may lead to unnecessary litigation that could further delay service delivery to the public.
loyiso.sidimba@inl.co.za