At a glance

Faced with tax penalties and interest? Unsure of what to do next? The Finance Act 2025 has finally delivered the long-awaited relief for taxpayers!

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By Peter Mutie, Tax Assistant Manager at Grant Thornton.

The Finance Act of 2023 introduced a tax amnesty on penalties and interest. The remission of penalties and interest under the tax amnesty was preceded by payment of all outstanding principal taxes accrued to 31 December 2022. Following massive uptake of the amnesty by taxpayers, the National Treasury extended the tax amnesty, through the Tax Procedures (Amendment) Act, 2024, to cover penalties and interest on the unpaid taxes that had accrued up to 31 December 2023. Previously, the Finance Act of 2023 had scraped the Commissioners powers to waive penalties and interest under Section 89 of the Tax Procedures Act (TPA, 2015).

Amendments Introduced under Finance Act 2025

The Finance Act 2025 amended Section 89 of the TPA, 2015 to empower the Cabinet Secretary Responsible for National Treasury, and upon recommendation by the Commissioner, to waive the whole or part of the penalties and interest imposed to taxpayers due to errors.

Conditions for waiver of penalty and interest

In order to qualify for waiver under Section 89 subsection 5A, the liability on penalty and/or interest should be due to the following;

  • Error generated by an electronic tax system;
  • Delays in updating an electronic tax system;
  • A duplication of a penalty or interest due to a malfunction of an electronic tax system; or
  • The incorrect registration of the tax obligations of a taxpayer.

The advent of the above tax law amendment offers the long-awaited relief to taxpayers who were forced to pay the resultant penalties and interest to the Commissioner thus negatively affecting their cash flows. Further, the amendment is a welcome move as taxpayers are now eligible for waiver of penalties or interest occasioned by system errors (modules such as iTax) beyond their control. This promotes fairness where taxpayers would have complied save for system errors.

Exclusions from waiver and waiver applications

It is equally important to note that all other penalties or fines and interest arising from other forms of non-compliance are not eligible for waiver or waiver application.i.e.late payment penalty or interest. Taxpayers should therefore monitor their compliance to avoid future penalties, interest and other non-compliance costs.

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