Finance

SARS is making a permanent change in how it does business – what you need to know

Staff Writer

 ·1 Nov 2022

The South African Revenue Service (SARS) set out goals to permanently change how it does business – and is hitting nearly every mark.

In its latest Annual Performance Report of 2021/22, the tax authority found that out of its nine strategic objectives, the service reached or exceeded most of its targets, only falling short on a few.

The change in its business that it has been least successful in implementing is making tax laws and obligations clearer for taxpayers, but this is something it will continue to work on, it said.

The group also said it needs to work on increasing ICT investment in its systems and gaining more public trust.

According to SARS commissioner Edward Kieswetter, the revenue service has seen encouraging progress over the past three years in its pursuit to modernise and ensure better voluntary tax compliance and making it more difficult and costly for South Africans to evade the taxman.

Since 2019, SARS has been on a mission to rebuild its integrity, credibility and performance, said Kieswetter. The overall performance of the revenue service can be seen in it reaching the goals outlined by the National Treasury under finance minister Enoch Godnogwana – and new ones being set.

In the minister’s latest Medium-Term Budget Policy Statement (MTBPS), Godongwana said that revenue collection estimates for SARS have increased, with the taxman now expected to collect R1,682 billion this year – up R84 billion from the February Budget.

SARS has a vision for 2024 to build a smart, modern institution with unquestionable integrity that is trusted and admired, Kieswetter said.

To achieve this, the taxman set out nine strategic objectives to develop and administer a tax and customs system of voluntary compliance and, where appropriate, enforce responsibility decisively.

The sections below break down SARS objectives and how close it is to meeting them:

1. Provide clarity and certainty for taxpayers and traders of their obligation

After conducting a clarity survey on taxpayers’ satisfaction with the clarity and certainty of guidance offered by SARS, the group found that the actual percentage of people who are satisfied with the clarity and certainty SARS provides is 69.06%.

From a taxpayer category perspective, the segments have generally shown a significant increase in clarity and certainty over the past two years, said SARS.

According to the authority, it will continue to raise awareness and educate taxpayers on the certain taxes that exist as well as what is required from them to comply.

2. Make it easy for taxpayers and traders to comply with their obligations

“This indicator computes the number of taxpayers and traders who use any of the digital platforms to interact with SARS. It effectively gauges the migration from physical platforms to digital platforms,” said SARS.

This includes self-service and excludes assisted utilisation of digital platforms, added SARS.

There has been a significant uptick in those using digital platforms, with a total of 7.6 million interactions comprising 7.1 million digital and the rest manual.

SARS has also been on a drive to use data to its advantage and assist taxpayers by filing tax returns automatically without interference.

According to the group, over the 2021/22 period, the authority outdid itself, surpassing the 85% target of auto-assessments with 91% of standard taxpayers being auto-assessed.

3. Detect taxpayers and traders who do not comply and make non-compliance hard and costly

SARS has made advances in detecting non-compliance through automated risk engines. Over the period of assessment, more than 98% of the compliance risks detected by SARS’s automatic systems were correct.

Taxpayers and traders who negligently, deliberately, aggressively, or criminally stay out of the tax system or do not comply will be detected immediately when non-compliance occurs, said SARS.

“They will experience a response appropriate to the nature and degree of their non-compliance, which progressively may include friendly reminders to more intrusive and investigative engagements that enforce compliance.”

4. Develop a high performing, diverse, agile, engaged and evolved workforce

The internal workplace at SARS has also undergone changes, with tasks becoming less administrative and more analytical and service-oriented.

The company has also become a hotspot for new graduates and is a place people want to work.

5. Increase and expand the use of Data

SARS has been expanding its use of data profiling and assessment to detect risk automatically, even in complex matters.

• Standard matters – Risk assessment emanating from the submission of tax returns and customs declarations.
• Complex matters –  Risk detection beyond the scope of information contained in returns and declarations submission and often requires manual evaluations.

The table below indicates the number of cases that were sorted automatically based on complexity.

6. Modernise our systems to provide digital and streamlined online services

SARS reported the following levels of digital platform availability for taxpayers and traders in terms of the percentage of planned capacity to be available for mission-critical systems.

7. Demonstrate effective resource stewardship to ensure efficient and quality outcomes

SARS has reconfigured its cost structures to align with international peers – increasing ICT investment. The indicator below shows the change in investment as % of the total allocation:

8. Work with and through stakeholders to improve the tax ecosystem

SARS has been on a mission to align itself completely with international standards. The group has met all its commitments in terms of the Organisation for Economic Cooperation and Development (OECD).

9. Build public trust and confidence in the tax administration system

“The public is confident that our stewardship of the country’s tax system is professional, unbiased and fair; we always act and do the right thing all the time; we maintain the highest standards of integrity and ethics; we have transparent governance systems and processes, and we have capable and trustworthy leaders,” SARS said.

The indicator below is the level of trust and confidence surveyed that taxpayers have in the institution.

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