Despite constructions firms’ best intentions to get on the right side of the public sector’s perception they have been punched with a body shot from SARS.

This follows the widely publicised affair of 15 companies paying a total fine of R1.46 billion for collusive tendering after an investigation by the Competition Commission. SARS has indicated that it is concerned about the low level of tax compliance in the construction industry – a seemingly vague accusation so far but one that will be watched closely while the tax authority digs deep for data to badger construction companies to pay their dues to the fiscus.

During the 2013-14 fiscal year SARS carried out and completed 800 audits of construction firms – raising R1.76 billion in assessments of which R192.6 million has been collected. During the time frame it also discovered — based on information supplied by the cidb and NHBRC — that there were 627 companies that were not registered for either VAT or PAYE.

SARS has stated it will pay particular attention to companies that receive government contracts to ensure they are tax compliant because these firms receive funding that is sourced from taxpayers. The modernisation of the tax clearance certificate system would tighten control over the issuing of certificates that are required for applications for government contracts going forward.