Abstract
Within the context of the Tax Administration Act 28 of 2011 (TAA), this dissertation offers a critical analysis of how well tax penalties encourage compliance among South African taxpayers. Along with the remedies available to taxpayers, including remission, voluntary disclosure, and dispute resolution, it examines the composition, intent, and implementation of administrative non-compliance fines, percentage-based penalties, and understatement penalties. The study assesses the operational, psychological, and financial impacts of fines on taxpayers, especially small and medium-sized businesses (SMEs), who are more susceptible to administrative punishments and have disproportionately high compliance costs. Variations in taxpayer behaviour, perceptions of justice, and the connection between trust and enforcement are all explained by behavioural compliance theories, such as the Theory of Planned Behaviour, the Slippery Slope Framework, and Deterrence Theory. The study considers new developments in SARS administration, such as the revised filing dates for PAYE, VAT, and provisional taxpayers, auto-assessments, and the stricter penalty regime for trusts (2025–2026). Empirical data on overdue returns, debt collection, and revenue related to compliance offer useful insight into how well the penalty system works in practice. The understanding of how courts interpret purposeful tax evasion, genuine inadvertent error, and the burden of proof in penalty issues is enhanced by case law like Ntayiya v CSARS. Comparative results show that although South Africa's penal system is extensive, it lacks the legislative certainty and clarity of more developed systems like the US. The African Tax Administration Forum's (ATAF) regional insights shed light on issues that are prevalent in all African tax administrations, such as a lack of administrative capability, complicated procedures, and sizable informal sectors. The study concludes that while fines discourage non-compliance, they are insufficient on their own and have the potential to erode voluntary compliance if they are viewed as excessive, ambiguous, or inconsistently implemented. To increase confidence, decrease inadvertent mistakes, and promote long-term, voluntary compliance in South Africa's tax system, it is advisable to expand taxpayer education, increase procedural transparency, improve statutory clarity, and make use of digital compliance tools.