WATCH | Montana says tax debt ballooned to R55m due to hard penalties and interests

Former Prasa CEO and current MP Lucky Montana says the R55m he owes to the SA Revenue Service (Sars) stems from excessive interest and penalties.

This is after Sars on Saturday said Montana had 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 manipulated the Tax Administration Act to justify their 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.

Montana said the amount he is claimed to owe is from a decade of hard penalties and interests.

But they’ve added interest and penalties – up to 200% per year over 10 years. They applied it retrospectively.

—  Lucky Montana, former PRASA CEO

“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 R7m 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 R7m to R8m.

“But they’ve added interest and penalties – up to 200% per year over 10 years. They applied it retrospectively. That’s how we get to R55m. Some of these penalties are outrageous,” he explained.

However, Sars has firmly rejected Montana's claims, stating that the R55m 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 noncompliance.

Sibeko said Montana’s allegations of fraud and manipulation were “false and misleading”.

“It is untenable for Mr Montana to publicly attack Sars and its officials while simultaneously seeking a compromise on 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.

Sowetan