SARS is using a new high-tech system to target taxpayers in South Africa – here’s how it works

The South African Revenue Service (SARS) is using computer algorithms, machine learning and other advanced technologies to ensure taxpayer compliance.

In its annual report published on Wednesday (27 October), the revenue collector said it had reviewed its methodology to detect risk and highlight cases where non-compliance was detected.

“SARS has significantly expanded the scope of detection, beyond data obtained through declarations, as well as the traditional third party data received which enabled the pre-filling of PIT returns, as well as auto assessments.

“Examples of such data sources include historical data on compliance behaviour as well as data regarding financial flows and assets held both locally and abroad,” it said.

SARS said it has also implemented several machine learning models that leverage multiple asset and income stream data sources to detect non-declaration and under-declaration.

“Thematic input is also considered to adequately reflect the impact of policy changes and relevant emerging dynamics in its risk detection process.

“Examples of this included abuse of donations in the context of Covid relief measures, fraud resulting from PPE tender contract awards as well as the flow of digital money.”

Finally, a more rigorous feedback loop was introduced to ensure that false positives are minimised, and assurance work is focused on where the most prominent risks are.

SARS said that the system has already detected several key issues, including:

“With the improvement of the risk engine rules, the percentage cases selected for verification has decreased from 21.57% to 14.11%. This equates to a 35% reduction in cases selected for audit intervention. With reference to the adjustment rate of selected cases,” it said.

“SARS improved from 35.10% to 47.79%. Total yield from automated risk engine activities for the year ending March 2021 was R56.9 billion, which was R3.9 billion higher than the R53 billion estimate.”


Read: SARS will look at your Facebook, credit cards and other data to see what tax you owe, say experts


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