Digitalisation of tax authorities, including the South African Revenue Service (SARS), is imperative to keep pace with global changes.
This is the sentiment expressed by Tumi Malgas, director: tax management consulting and tax technology consulting leader at Deloitte Africa, during a roundtable discussion hosted by the audit firm.
Yesterday, Malgas, together with other Deloitte Africa experts, outlined some key expectations regarding the upcoming 2022/23 National Budget Speech and its implications for the South African economy.
Commenting on SARS and technology, and how it’s likely to affect the ordinary person, Malgas pointed out: “We are in the fourth industrial revolution.
“We are seeing many tax authorities across the globe implement a number of initiatives to further their digital transformation journey; for example, electronic invoicing…and real-time access to data.
“For SARS, digitising and implementing real-time models of obtaining information from taxpayers would be a really great way to bolster the economy, or collect more revenue,” she explained.
In the past, SARS commissioner Edward Kieswetter has bemoaned the revenue authority’s technological capacity, skills limitations and leadership challenges.
Under Kieswetter’s leadership, the taxman has embarkedon a journey to be a “re-imagined SARS of the future” where increasingly its work will be informed by data-driven insights, self-learning computers, artificial intelligence (AI) and interconnectivity of people and devices.
The commissioner also said SARS will lean on technologies like AI and machine learning to boost its functions and improve its integrity. He pointed to the revenue authority’s increasing use of data as an indispensable asset, describing data as the “new gold”.
On International Customs Day last month, Kieswetter committed the SARS customs division to scaling up its digital transformation and increasing the use of data to improve the facilitation of trade, revenue collection and compliance by traders importing and exporting goods across SA’s borders.
In terms of economic recovery of the country, and growth and development plans, Angelique Worms, director in the global employer services unit for the Deloitte Africa tax and legal practice, doesn’t think increasing the tax rate is the solution.
The answer is increasing the tax space, getting the economy going and finding the growth and development, she said. “In my view, the tax rates are unlikely to change for personal income tax, and we’re hoping to see that the rebates are adjusted for inflation.
“COVID-19 had an impact on SARS and its ability to collect taxes. Very quickly after COVID hit, SARS had to move very quickly onto technology and technical platforms, and online meetings, etc.
“In my view, they’ve actually done really well. We’ve seen a big uptake in the automated assessments that have been sent out. There were three million automated assessments sent out for the 2021 tax year, and SARS is going to keep increasing the number of automated assessments going out.
“SARS has also got agreements with countries to share information. It is pre-populating a lot of information on the tax return, making it much simpler for people to submit tax returns and to be compliant.”
Worms noted SARS has employed a number of people to bolster its divisions, especially in the high net worth sectors and call centres. SARS is rebuilding itself, she commented.
“In my view, it’s not so much getting more in, but doing more with what you have. SARS has got a lot of information, it just needs to know how to use it, how to join the dots up, and I think we will be able to increase our base and increase our taxes using that data.
Speaking about new ways of collecting taxes, she said: “SARS’s one challenge is that a lot of tax either gets collected on assessment or through provisional tax. The idea is SARS may start looking at getting tax immediately from third-party providers…potentially moving away from a six-month provisional system, to making it more flexible.
“SARS has got the technology and the provision so that you can pay the provisional [tax] as and when you earn the income as opposed to waiting for six months.”
Severus Smuts, director: transfer pricing and international tax at Deloitte Africa, added there has been much better collections from SARS, far exceeding its targets.
This is mainly as result of doing things much better, he said, pointing to the use of data, focusing on data analytics and putting that information together.
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