Tax Isn’t the Enemy — You Just Don’t Understand It Yet

For many people, tax feels like a trap. It is the thing you only think about when SARS sends an email, when deadlines are approaching, or when someone starts throwing around terms like VAT, provisional tax and compliance. It often feels confusing, stressful and distant from everyday life.

But according to tax specialist Lesetja Makhura, that fear usually comes from a lack of understanding, not from tax itself.

In conversation, he broke down tax in a way that made one thing very clear: tax is not only about paying government. It is about planning, structure, awareness and making sure your financial life or business is built on the right foundation.

Part of the problem is perception. SARS has a bad reputation in the minds of many people, and tax is often treated like something scary and punitive. But Lesetja argues that the bigger issue is not tax itself. It is that many people do not learn how it works early enough.

By the time they have to deal with it, they are already behind.

That is especially true for business owners. Many people start companies focused on products, services, sales and growth. Tax is often the last thing on their minds. But in reality, tax begins much earlier than most people realise.

The moment a company is registered with the CIPC, a tax number is automatically created and linked to SARS. That means from the beginning, there is already a tax relationship in place. Whether it is income tax, VAT or PAYE, the business needs to understand what applies to it and when.

One of Lesetja’s biggest messages is simple: do not wait until the end.

Many businesses only think about tax after a deal has been structured, after a transaction has happened, or after SARS has already started asking questions. At that stage, the cost of fixing mistakes is much higher.

When tax is ignored upfront, businesses can end up with unnecessary tax leakage, penalties, interest, disputes and sometimes reputational harm. In some cases, they may need lawyers and advisors to step in later to resolve problems that could have been prevented much earlier.

The better approach is to involve tax from the start. That does not mean becoming overly technical or paranoid. It means making tax part of the business process instead of treating it like an emergency response.

Corporate tax sounds like a big and intimidating phrase, but at its core it is quite simple. It is the government’s share of a company’s profit.

Just as individuals pay tax on the income they earn, companies pay tax on the profits they make. The calculation is more complex because businesses have financing structures, expenses, investments and operations to consider, but the basic principle is the same. If a company makes money, a portion of that goes back to the state.

That money helps fund public services and infrastructure. Roads, schools, hospitals and utilities do not exist in isolation. Tax helps support the systems that individuals and businesses both rely on.

This is why Lesetja believes ordinary people should care about how companies are taxed. Businesses benefit from public goods too, and it is only fair that they contribute to the same ecosystem.

One of the most practical parts of the conversation was his explanation of how businesses raise money and how tax affects those decisions.

A company can raise funding through debt or equity. Debt means borrowing money that must be repaid, usually with interest. Equity means bringing in investment in exchange for ownership.

From a tax point of view, interest paid on a loan is usually tax deductible, while dividends paid to shareholders are not. That means debt can sometimes look cheaper from a tax perspective. But too much debt also creates financial pressure, especially for businesses that are still growing.

Equity, on the other hand, may offer more stability because it does not require the same repayment pressure, but the returns come from after-tax profit. That is why businesses need to balance tax efficiency with risk, cash flow and long-term strategy.

A structure that looks attractive on paper may not make sense once tax and commercial reality are both considered properly.

Things get even more complex when money moves between countries.

Once a business operates beyond South Africa, it is no longer dealing with only one tax system. It now has to consider the laws of multiple jurisdictions, international agreements, withholding taxes, transfer pricing rules and double taxation concerns.

Lesetja explained it simply: it is like visiting someone else’s house. Your house has rules. Their house has rules. You need to respect both.

This is where documentation becomes critical. Businesses operating across borders need clear records of who they transacted with, what was paid, why the transaction happened and how the values were determined. Without that, they risk disputes, penalties and cash flow disruptions later.

Perhaps the most repeated lesson in the entire conversation was this: if it is not documented, it did not happen.

That mindset matters because SARS does not just want a business to be correct. It wants the business to prove that it is correct. Receipts, invoices, contracts and supporting documents are not admin for the sake of admin. They are evidence.

For VAT-registered businesses, invoices are essential for claiming input VAT. For expense deductions, proof of the cost is necessary. For audits and reviews, documentation shows the business rationale behind decisions and transactions.

Many problems begin when a business waits until an audit starts to create a paper trail. By then, it is often too late to build a strong case. Proper documentation should happen at the time the transaction happens, not years later.

Having worked at SARS, Lesetja has seen what tends to trigger scrutiny.

Some of the red flags include businesses that do not file returns, businesses that are constantly in a refund position, and businesses that repeatedly show assessed losses without a clear commercial explanation. SARS may also notice when a company is issuing VAT invoices but the suppliers connected to those invoices are not reflecting those transactions properly on their side.

These patterns do not always mean fraud, but they do raise questions. And once questions start, the burden shifts to the business to explain what is happening.

An important part of the discussion was the difference between structuring wisely and becoming too aggressive.

Good tax planning is about paying the right amount of tax, in the right place, at the right time, within the law. It is about being efficient without crossing legal or ethical lines.

Problems begin when businesses become overly aggressive and start using structures that are designed mainly to shift profits artificially or avoid tax in ways that are not aligned with the spirit of the law. This is especially common in conversations around multinational companies and tax havens.

That is where rules like transfer pricing come in. These rules exist to make sure transactions between related parties are done at market value and not manipulated to move profits unfairly from one country to another.

Ignoring tax can cost more than many business owners expect.

At the most basic level, it can lead to penalties and interest. Those are avoidable costs that eat into the business’s money and distract from growth. It can also create reputational damage, especially if it becomes public that a company has not managed its tax obligations properly.

In more serious cases, where fraud or gross negligence is involved, criminal consequences can also become a possibility. Not every tax failure leads to prison, but serious contraventions can attract far more than a financial slap on the wrist.

That is why tax should never be treated casually.

What makes Lesetja’s perspective refreshing is that he does not describe tax as a burden first. He describes it as part of responsible financial behaviour.

For individuals, it is about understanding what you earn, what you owe and how to use systems like tax-free savings and retirement contributions wisely. For businesses, it is about good governance, strong planning and reducing unnecessary risk.

His overall message is clear: tax works best when it is approached early, documented properly and understood as part of the bigger financial picture.

Tax may never be the most exciting topic in the room, but avoiding it does not make it less important. If anything, that avoidance is what makes tax feel harder later.

Lesetja Makhura’s insights remind us that tax is not just compliance. It is strategy. It is structure. It is preparation. And in many cases, it is one of the clearest examples of how financial knowledge protects both people and businesses.

The more we understand tax, the less power fear has over us. And that alone is a lesson worth carrying forward.