If you were hoping that the SARS interest rates for 2023 would be better than those in 2022, then we hate to disappoint you. While they do remain high and SARS (The South African Revenue Service) has increased their interest rates, it is important to remain informed and updated on the newest adjustments. In this article, we will break down the three main SARS interest rates and their most recent updates.
The Concept of a SARS Official Interest Rate
If you borrow or owe money in any capacity, an interest rate is applied. This can be defined as a percentage that is applied to the load amount annually and it forms part of your repayment. Ultimately, it is the price one pays for borrowing money. When taking out a loan there is the option to get a fixed or a variable interest rate. A fixed interest rate will remain the same throughout the lifetime of the loan; whereas, a variable interest rate will fluctuate. While one might only think of interest rates in the form of home loans or car loans, interest rates are also applied by SARS on outstanding taxes. This is just another reason why it is essential to make sure that you always pay your taxes on time.
What Are SARS Official Interest Rates for 2023?
In South Africa, there are three types of interest rates that are consistently being updated and adjusted. It is important to keep up with these changes as they do affect what you will be paying on your outstanding taxes, loans, and more. Here are the three types of SARS interest rates and their most recent updates.
- Outstanding Taxes: If you have neglected to pay the amounts owed to SARS, interest will be charged on those outstanding taxes, levies, and duties. If you have successfully appealed SARS and you are owed a refund, this refund will also receive interest. Previously, the interest rate for outstanding taxes and refunds was 9.75% per annum. This has been updated and will now be 10.5%. This new interest has officially taken effect from the 1st of March 2023.
- Credit Amounts: If you have overpaid on your provisional tax and now have a credit, you will still receive an interest rate. This interest rate previously consisted of 5.75%; however, this was increased to 6.5% as of the 1st of March 2023. This interest rate will remain at 6.5% until a change in the PFMA rate occurs.
- Loans: As most of us know, when you take out a loan, the amount owed is taxed. Whether you are paying back a car or your home, this interest change will affect your monthly repayment plan. Therefore, previously, the interest rate on loans was 8.00%. Now, the rate has increased to 8.25%. This change took effect on the 1st of February 2023 and will remain until there is a change in the Repo rate.
Keeping Up-To-Date With SARS Interest Rates
As has been mentioned, it is important to remain updated on the most recent interest rate changes. However, this does not have to be as complicated as it seems. If you and your business make use of a comprehensive payroll system such as PaySpace, all of the newest legislation and interest rate updates will automatically be renewed on your payroll software system. Implementing such a system will also help you stay on track and pay your taxes on time, in which case, some of these interest rates will not apply to you.
Contact PaySpace to find out how our cloud-native payroll software system can help you stay ahead of the SARS interest rates and their frequent changes.