Business Debt Collection And Municipalities

Businesses who have not paid their taxes will be penalised as per the plans revealed by The South African Local Government Association (SALGA).  The South African state coffers are seriously drained by 278 municipalities who are owed more than R25 billion in taxes by businesses who are in arrears.

SALGA, in an effort to turn the situation around, has announced that it requires businesses to present evidence that they do not owe the state in taxes. Without this proof, they are not to be awarded any municipal contracts and tenders. In order to allow businesses to do business with the municipality, they will have to provide a “rates clearance certificate” with the necessary evidence of a positive credit rating.  Municipalities are within their power to turn off electricity and water to business premises who have not paid their rates for an extended period of time

A debt collection agency, the new municipal debt collection procedure, as proposed and orchestrated by SALGA, will act similarly to a private debt collection firm. This organisation will have access to the South African Service database and they will also collect the municipal data, detailing the information of those who have not paid their rates and taxes.  This debt collection division of SALGA may decide which businesses to refuse municipal contracts and tenders, and even cut off services if necessary with the information they have collected.

State employees who are also in arrears will, in the same manner, be pursued by this agency as maintained by SALGA. They also maintain that the changes will hopefully tighten up a system that suffers from such a high number of defaulters because of poor service delivery.

This debt collection process will likely cause altercations between businesses and municipalities. If your business requires the services of an experienced debt collection attorney, then make sure you contact Joselowitz & Andrews Attorneys today.

Our experienced team of debt collection attorneys can assist you in moments. For more information concerning our debt collection practice, consult our debt collection page by clicking the link.