Fidelis Vox | We discern what really matters to you

The Budget Speech 2023 was almost like looking at a photo after applying a good Photoshop filter – it was better than expected. In an era where we are desensitized on a daily basis on topics from loadshedding to everything else, even the markets did not flinch as a nod of appreciation.

 

On the tax front, everything announced were as expected as the low tax morale would have been pushed over the edge if any tax hikes were announced. The solar rebates contributed to a balanced budget. The big question, however, is how did SARS exceed its own expectations in revenue collections during the past fiscal year?

 

Edward Kieswetter, Commissioner of SARS, recently discussed on the PSG Think Big series their reliance on artificial intelligence, specific software and algorithms to work through big data – i.e. taxpayer information from domestic and international sources such as financial institutions – to get to the low hanging fruit. The statistics speak for themselves:

 

Risks on taxpayers’ profiles are objectively identified promoting administrative efficacy. Mr Kieswetter mentioned an example of a total of 4,3 million VAT returns that were submitted. Based on AI and other data-driven tools, 250,000 cases were selected for further scrutiny. Of these cases, approximately 71% were desktop reviewed and additional information were requested from the balance of taxpayers. This exercise alone averted R42 billion of impermissible transactions.

 

Of the R94 billion additionally collected than forecasted, Mr Kieswetter, speaking to Moneyweb journalist Ryk Van Niekerk, ascribed this to the same factors mentioned above and did not pinpoint its successes to a single drive or focus, but rather applying a cohesive approach by SARS. With compliance on the forefront, SARS has collected R60 billion of the R94 billion from debt owing to SARS.

 

They did so by finalising 1,4 million disputes and issuing 540,000 final demands. With reference to criminal prosecutions, SARS conducted 829 investigations of which 178 cases were referred to the National Prosecution Agency. Of these cases, 94 cases were finalised by the NPA of which 92 cases were successful.

 

Staff at SARS are held to the highest standard of professional behaviour and he mentioned that dismissals due to unprofessional conduct is a reality and where applicable, they’d consider criminal charges (with reference to a specific dismissal).

 

He estimated that by the end of the current fiscal year the amount of collections could increase to as much as R147 billion when considering the successful administrative actions collectively. In the past fiscal year an additional 1 million taxpayers were added to the taxpayer register at SARS. The goal is to create a seamless experience for taxpayers to be compliant and easier ways to do so.

 

Directionally the aim according to Mr Kieswetter is not to increase taxes, and wealth tax is currently not under scrutiny, but rather a dedicated aim on administrative efficacy within SARS.

 

The bottom line is that SARS has, since the previous decay in SARS’ leadership, the means and capability to comb through troves and troves of data to get to what is owing to them. They have the tools and resources to assist them. Although the tax morale is low, now is not the time to take part in a tax revolt or to withhold due taxes to SARS.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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