If you’re a South African taxpayer struggling with long-overdue tax debts, there’s important news from SARS. Debt Compromise Applications are now open, giving qualifying taxpayers the chance to settle their debt by paying only a portion of the total amount owed, with SARS potentially writing off the remainder. This is a valuable opportunity to start fresh, avoid penalties, and regain full tax compliance.
What is a SARS Debt Compromise? (Section 200 of the TAA)
Section 200 of the Tax Administration Act (“TAA”) empowers a senior SARS official to enter into a compromise agreement with a taxpayer. This means SARS can legally accept a reduced amount as full and final settlement of your tax debt—including taxes, penalties, and interest—if you meet strict criteria. The purpose is to secure the highest net return for SARS where a taxpayer cannot pay the full amount, while also promoting good management and administrative efficiency.
A compromise is not a payment plan—it’s a formal agreement where SARS writes off the unpaid balance once you pay the agreed reduced amount. However, SARS will only consider this if you can prove you genuinely cannot pay the full debt now or in the foreseeable future, and if it’s in the best interest of the fiscus.
How Does the Rapid Compromise Campaign Work?
SARS has launched a new Expedited Tax Debt Compromise Process (Rapid Compromise Campaign) to help taxpayers resolve old, undisputed tax debts quickly. Here’s how it works:
Who Qualifies?
- Debt must be older than 12 months and not under dispute
- You must not be insolvent, deceased, or in final deregistration with CIPC
- Debt must not arise from fraud or criminal conduct
- All tax returns must be up to date, even if unpaid
- You must demonstrate inability to pay in full (not just unwillingness)
- No compromise granted in the past three years (per section 200 TAA)
Who Does Not Qualify?
- Entities in liquidation, business rescue, or under criminal investigation
- Taxpayers with means to pay but refusing to do so
- Cases under audit, suspension, or temporary write-off
How to Apply:
- Applications must be submitted by a registered tax practitioner linked to a Recognised Controlling Body (RCB)
- You’ll need to provide comprehensive supporting documents: financial statements, proof of income, expenses, liabilities, and a three-year financial plan
- SARS has committed to resolving qualifying applications within four weeks using dedicated teams and enhanced workflow management
What Happens Next?
- If approved, you pay the agreed reduced amount and SARS writes off the balance
- If you default or fail to remain compliant, SARS can reinstate the full debt
- Taxpayers who do not qualify or remain non-compliant will face normal enforcement actions (including court judgments and asset seizures)
Why Professional Help is Essential
A Debt Compromise Application is a formal negotiation with SARS. Submitting an application correctly—especially under the new rapid campaign—can make the difference between approval and rejection. A qualified tax practitioner will:
- Assess your eligibility and financial position
- Prepare a complete, accurate, and compelling application
- Submit through the correct channels and navigate SARS follow-ups
Contact me today to see if you qualify and to get expert guidance on preparing and submitting your application. Don’t miss this opportunity to settle your tax debt and regain peace of mind.
References:
- SARS Rapid Compromise Campaign: SARS Media Release, Accounting Weekly