SARS Registration Delays Cost Taxpayers and South Africa’s Economy

South Africa’s economy is struggling, and every rand of tax revenue is critical to the fiscus. However, severe delays in SARS tax registrations are preventing businesses from contributing, impacting taxpayers and slowing economic activity.

Why Are Tax Registration Delays a Problem?

SARS has been experiencing significant backlogs across multiple tax types, including VAT, carbon tax, and the health promotion levy (sugar tax). Despite a promised turnaround time of 21 business days, many businesses—including large corporates and multinationals—have been waiting months, and in some cases, over a year, just to get registered.

The reason? SARS has tightened its registration requirements to prevent fraud. While fraud prevention is essential, these delays are unintentionally creating bottlenecks that hinder legitimate businesses from operating efficiently.

Impact on Businesses and the Economy

The consequences of SARS’ slow registration process extend beyond just inconvenience. They have real economic costs, including:

• Delays in business transactions: In 2024, a business transfer was delayed for months because the buyer couldn’t get a VAT number.
• Trade disruptions: Importers and exporters need VAT numbers to obtain customs codes, preventing them from trading internationally.
• Unnecessary tax burden: Businesses must repeatedly submit the same documents for different tax types, adding administrative headaches and inefficiencies.

Tax Types Affected by Registration Delays

The problem is not limited to VAT. Other tax types, such as the carbon tax and health promotion levy, also suffer from sluggish registration processes, even though these taxes only generate revenue for SARS, with no risk of fraudulent refunds.

A major issue is that SARS requires separate registrations for each tax type, despite businesses already being registered taxpayers. This duplication of effort makes tax compliance unnecessarily difficult.

How SARS Can Improve Registration Processes

To streamline tax registration and boost tax revenue collection, SARS should consider:

• Meeting its own 21-business-day deadline and focusing on post-registration audits to prevent fraud.
• Allowing businesses to register once, instead of requiring separate applications for each tax type.
• Introducing a self-service system on eFiling, making it easier for existing taxpayers to add new tax types.

By reducing red tape and ensuring faster tax registrations, SARS can collect revenue more efficiently, support business growth, and strengthen South Africa’s economy.

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