SARS is stepping up its game in 2023 – what you need to know
The South African Revenue Service’s (SARS) massive push towards cracking down on non-compliant taxpayers is likely to persist this coming year with a relentless focus on using data to analyse and pick up on gaps within a taxpayer’s statements.
As part of its mandate, SARS has implemented several measures to target certain non-compliant taxpayers and encourage them to meet their obligations under the law or face the consequences.
The most notable development in tax authority has been the introduction of data analytics. Data is now a key driver in identifying patterns of non-compliance in South Africans.
Shifting towards a more digital system has also opened the doors for taxpayers to fulfil their obligations more easily with things such as e-filing and electronic payment systems.
SARS commissioner Edward Kieswetter recently said the tax authority is on a journey of building a smart, modern SARS. By 2024 the group said it wants to be modernised – leveraging enabling technologies such as artificial intelligence and machine learning to gather more data. 2023 will see similar moves.
“As we are increasing and expanding the use of data…from a valuable source that supplements our vast third-party data repository enabling the detection of taxpayers and traders who do not comply,” said the commissioner.
Outlined in its strategic plan stretching from 2020/21 to 2024/25, SARS has given itself nine strategic objectives, some of which point to more data-driven analyses alongside harsher investigations into non-compliance. The objectives include the following:
- Providing clarity and certainty for taxpayers and traders of their obligations
- Making it easy for taxpayers and traders to comply with their obligations
- Detecting taxpayers and traders who do not comply and making non-compliance hard and costly
- Developing a high-performing, diverse, agile, engaged and evolved workforce
- Increasing and expanding the use of data
- Modernising its systems to provide digital and streamlined online services
- Demonstrating effective resource stewardship to ensure efficient and quality outcomes
- Working with and through stakeholders to improve the tax ecosystem
- Building trust within the public and confidence in the tax administration system
On top of using data to its advantage, the tax authority has taken a firm stance in the fight against non-compliance.
As indicated in the latter parts of 2022, the revenue service is not pulling its punches regarding tax obligations. Every day South Africans, billionaires and business owners are all being held to the same standard.
On 6 December, the CEO of tax advisory firm Hobbs Sinclair, Neil Hobbs, said that recent announcements by SARS of its non-compliance penalties – that took effect on 1 December 2022 – as well as increases in the number of requests for supporting documentation and verification of tax returns show an attitude change among the tax authority.
He said that the depth of investigation by SARS had deepened as well as its interrogative approach when reviewing returns.
Despite this harsher stance, where non-compliance has been made harder and more costly, the revenue service has encouraged people to approach it and streamlined the systems used to file returns.
SARS offers a Voluntary Disclosure Program (VDP) to help taxpayers expedite compliance and regularise their tax affairs. By coming forward voluntarily, taxpayers can receive assistance and advice from SARS.
According to Andre Daniels, the legal manager for tax controversy and dispute resolution at Tax Consulting SA, the benefits of using the VDP far outweigh the consequences of SARS initiating enforcement action.
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