Montana Says 85% of R55m Tax SARS Debt is Penalties

(The Post News)– Former Passenger Rail Agency for South Africa (PRASA) CEO and current MP Lucky Montana says the R55m in unpaid taxes owed to the South African Revenue Service (SARS) stems from excessive interest and penalties. His remarks come after SARS alleged on Saturday that Montana failed to submit income tax returns between 2009 and 2019.

On Monday, Montana held a briefing as a rebuttal to the statements made by the finance entity, saying the entity had manipulated the Tax Administration Act to justify its claims. “I laid criminal charges against the Commissioner of SARS for fraud, plagiarism, and defeating the ends of justice. They went back ten years, applied penalties retrospectively, and used the Tax Administration Act to inflate the amount to R55m,” he explained.

He said the amount he is claimed to owe is from a decade of harsh penalties and interest. “When we talk about R55m, 85% of that is interest and penalties. Some say there’s R23m in gross income, which, based on my tax rate, would be about R7 to R8m. When I challenge their 10-year assessment, they say, ‘We’ll show you.’ They impose penalties and interest. So we’re not talking about the capital amount. We’re disputing R7 to R8m.”

He further explained that they have, however, applied interest and penalties retroactively, increasing them by up to 200% annually over a ten-year period, which is how they arrived at R55 million. Additionally, according to him, some of these fines are ridiculous.

SARS Saturday Briefing

However, SARS has firmly rejected Montana’s claims, stating that the R55 million tax debt is the result of “numerous failures to submit income tax returns” and “under-declared income” over a 14-year period. The agency confirmed that it obtained a judgment under Section 172 of the Tax Administration Act in August 2022 for R44,927,320.

SARS spokesperson Siphithi Sibeko denied Montana’s claim that there was no valid court order, stating that the judgment was lawfully granted and based on years of non-compliance. Sibeko said Montana’s allegations of fraud and manipulation were “false and misleading.”

Sibeko argued that Montana cannot openly criticize SARS and its representatives while also attempting to reach an agreement on a tax liability he has accepted. Moreover, according to Sibeko,

“It is untenable for Mr. Montana to publicly attack SARS and its officials whilst simultaneously seeking a compromise of a tax debt he accepts. Dependent on the compromise process Mr. Montana initiated and the outcome thereof, SARS intends to set the sequestration application down for hearing in the high court.

“Mr. Montana has still not filed his answering affidavit in the sequestration application. SARS’s stated position against him therefore stands uncontested,” Sibeko said.

Montana Maintains Allegations

Montana, however, remains defiant. He affirmed that he does not “owe SARS a cent.” Additionally, he claimed that SARS is aware that the illegal and corrupt system they oversee—rather than him—is the one on trial today. He expressed that he is not scared, as he believes that the universe set this journey for him. He further declared, “This is not about me.”