After noting plans to lean on technologies like artificial intelligence (AI) and machine learning to improve compliance, the South African Revenue Service (SARS) says its efforts are beginning to bear fruit.
As a result, it is moving to increase and expand the use of data to improve the integrity of outcomes and enhance its capability to detect instances of non-compliance.
Says SARS: “Using the data from various domestic and international sources, as input into machine learning models, risk profiling and case selection, a number of trends have already been observed with positive outcomes in a number of instances, some of which were previously reported.”
According to SARS, examples of domestic third-party sources include banks, retirement funds, medical insurance providers, the properties deeds office, the companies register, the national register of motor vehicles, the National Treasury central supplier data base, as well as the national population register.
Internationally, SARS is relying on data sources such as the automatic exchange of information on South Africans with off-shore financial assets from about 100 foreign jurisdictions, as well as several mutual administrative agreements with sister organisations.
In the past, the revenue authority’s IT systems became the subject of much debate.
Under its current leadership, the taxman has a new vision to become a modern organisation of the future. In May, commissioner Edward Kieswetter told Parliament’s Standing Committee on Finance that SARS planned to increase its ICT spend by 2% in the 2021/22 fiscal year.
Unveiling the virtual tax season in July, Kieswetter said the organisation has, over the past year, further developed its competency in developing machine learning algorithms and AI to augment human effort. This, he stated, enabled SARS to provide its auto-assessment functionality, as well as the ability to detect non-compliance.
While SARS still has a long way to go, says the commissioner, it’s encouraging to see the strategic approach begin to show early impact.
Kieswetter explains: “SARS proceeds from the premise that most taxpayers are honest and want to fulfil their legal obligations. To these taxpayers, we will work hard to assist them by providing clarity and easing the burden of compliance.
“Those, however, who continue to defraud the tax system, must know that they do so at their own peril, as we make progress on the rebuilding and modernisation of the institution. SARS remains committed to build on its capability to enforce the law and pursue those who wilfully or criminally seek to break it.”
SARS advises that those taxpayers who are non-compliant with their tax obligations engage with the organisation via the voluntary disclosure programme (VDP) to determine if their disclosure would qualify for the relief provided in the VDP.
“Where the disclosure does not qualify for the relief, it is strongly recommended that the taxpayer concerned regularise their tax affairs via the various mechanisms that are currently available. The VDP programme has processed in excess of 1 000 applications, and that has resulted in R2.5 billion in revenue for the current year.”
“Our vision to build a smart, modern SARS with unquestionable integrity is beginning to bear fruit,” concludes Kieswetter.
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