{"id":779926,"date":"2024-07-08T15:00:00","date_gmt":"2024-07-08T13:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=779926"},"modified":"2024-07-08T14:48:05","modified_gmt":"2024-07-08T12:48:05","slug":"edward-kieswetters-r300-billion-headache","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/779926\/edward-kieswetters-r300-billion-headache\/","title":{"rendered":"Edward Kieswetter’s R300 billion headache"},"content":{"rendered":"\n

The gap between the tax that South Africans should pay and the amount collected is estimated to be R300 billion.<\/p>\n\n\n\n

This gap remains a challenge for South African Revenue Service (SARS) Commissioner Edward Kieswetter, who has prioritised increasing compliance.<\/p>\n\n\n\n

In February 2024, SARS announced that it had collected R1.74 trillion in net revenue, exceeding its provisional revenue target by almost R10 billion.<\/p>\n\n\n\n

The SARS Commissioner explained that this strong performance was partly a result of improved compliance.<\/p>\n\n\n\n

\u201cA focused compliance programme and improved taxpayer and trader compliance underpin fiscal sustainability and consolidation,\u201d Kieswetter said.<\/p>\n\n\n\n

\u201cTaxpayers must meet their obligations to pay their taxes. Those who fail to comply place an unfair burden on taxpayers and must face the consequences of breaking the law.\u201d<\/p>\n\n\n\n

Kieswetter highlighted that SARS’s strategic intent is to promote voluntary compliance and fiscal citizenship.<\/p>\n\n\n\n

\u201cThis forms the basis of the compliance initiatives implemented by SARS over recent years, which have contributed R210.3 billion year to date,\u201d he said.<\/p>\n\n\n\n

These compliance efforts represent an extraction rate of 15.2%, up from 12.4% in the previous year, showing year-on-year growth of R43.4 billion.<\/p>\n\n\n\n

Cash receipts emanating from these efforts amount to R124.7 billion, up from R105.1 billion in the previous year.<\/p>\n\n\n\n

\u201cLeakage prevention measures delivered R85.6 billion, up from R61.8 billion in the previous year,\u201d Kieswetter said.<\/p>\n\n\n\n

He added that due to strained economic growth, SARS must work harder to ensure that all taxpayers remain compliant and current with their taxes.<\/p>\n\n\n\n

\u201cSARS is implementing additional measures to sustain and even increase compliance revenue,\u201d he said.<\/p>\n\n\n\n

Despite the effectiveness of the South African Revenue Service\u2019s to improve compliance, there is still a big tax gap in South Africa.<\/p>\n\n\n\n

South Africa\u2019s net tax gap, the difference between taxes that should theoretically be collected in terms of the law and taxes that are collected, is more than R300 billion.<\/p>\n\n\n\n

\u201cWhile there will always be a tax gap in any country, that level of tax gap (15%+) is considered large,\u201d PwC SA tax controversy and dispute resolution partner Elle-Sarah Rossato said.<\/p>\n\n\n\n

For context, the estimated net tax gap in the United Kingdom is under 5%, and in Australia, it is 7%.<\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

Rossato said halving the tax gap in South Africa would positively impact the country\u2019s fiscal metrics.<\/p>\n\n\n\n

A significant reduction in the R300 billion tax gap, which is similar in size to the main budget deficit, could free up space for tax cuts.<\/p>\n\n\n\n

\u201cClosing the tax gap is a core responsibility of SARS, and they must be given the resources to invest in people and technology that would help them do so.\u201d<\/p>\n\n\n\n

Rossato said a prominent factor enabling SARS to boost its revenue collection has been its drive to improve compliance with a greater focus on deploying new technologies.<\/p>\n\n\n\n

To transform SARS into a modern, technology-driven tax authority, greater emphasis must be placed on its tech and artificial intelligence (AI) capabilities.<\/p>\n\n\n\n

The revenue authority is taking this seriously, considering the implementation of its Compliance Programme and Tax Administration 3.0.<\/p>\n\n\n\n

Fraud and the illicit economy are among SARS\u2019s key concerns. Greater tech adoption will help the organisation be better equipped to combat non-compliant taxpayers.<\/p>\n\n\n\n

PwC SA tax controversy and dispute resolution associate director Jadyne Devnarain said SARS uses data, AI and machine learning algorithms to counter non-compliance.<\/p>\n\n\n\n

\u201cFor SARS, a key focus is curbing illegitimate refunds. These systems aim to prevent refunds claimed fraudulently,\u201d she explained.<\/p>\n\n\n\n

\u201cSARS has recently reported that the use of these systems contributed to it preventing the outflow of R101 billion of impermissible refunds in the last financial year.\u201d<\/p>\n\n\n\n

\u201cThat said, there is still much work to be done for SARS to fulfil the ambition of becoming a modern and technology-driven tax authority.\u201d<\/p>\n\n\n\n

\n\n\n\n

Read: SARS auto-assessment alert<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

The gap between the tax that South Africans should pay and the amount collected is estimated to be R300 billion.<\/p>\n","protected":false},"author":10,"featured_media":648415,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[19467,20145,3246,19922],"class_list":["post-779926","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-edward-kieswetter","tag-elle-sarah-rossato","tag-sars","tag-south-african-revenue-service-sars"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/779926","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=779926"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/779926\/revisions"}],"predecessor-version":[{"id":781431,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/779926\/revisions\/781431"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/648415"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=779926"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=779926"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=779926"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}