The South African Revenue Service (SARS) says it has seen an increase in tax non-compliance with some taxpayers having dishonest, illegal, and suspicious behaviour.
SARS Commissioner Edward Kieswetter says they have done a lot of work on non -compliance and believe the majority of taxpayers are honest when filling their returns.
Kieswetter was speaking at the opening of the two-day South African Institute of Taxation annual Indaba currently taking place virtually.
The commissioner also gave an update on the work SARS has done over the last year. SARS says they have administered R38.3 billion of relief measures and introduced more than 40 additional technology enhancements in their digital e- filling platform.
Efforts to mitigate non-compliance
SARS says they put measures in place to mitigate against the increase in non-compliance.
“It is our aim to select honest taxpayers through our seamless service and to detect the dishonest or negligent taxpayers for further investigation. And of course using data, artificial intelligence, and machine learning to emit human effort is central. Sadly corruption in society continues to be a menace in all our organisations and it is important we are all co-creators of an ecosystem that is free of corruption,” says Kieswetter.
SARS elaborates some of the work it has done to deal with non-compliance.
“A total of 1.7 million returns were detected in the past year for audit and verification through the SARS risk engines and this yielded additional revenue of R57.2 billion, revenue that was not going to be collected had it not been for the work and efforts at SARS. We have also detected 26 000 potential individuals with cash flows in excess of a million rands that were not on our tax register.”
Chief Executive Officer of the South African Institute of Taxation Keith Engel, says the country’s economic recovery will be long and slow. Engel believes the country is in a much better space than where it was in 2017 but the government is not moving fast enough to deal with major economic pressures.
This year’s tax indaba is hosted under the theme ‘Closing the Tax Gap’ in respect of the South African Revenue Service’s (SARS) overarching objectives to meet its revenue collection targets. Engel says spending will remain tight.
” We’ve got no new taxes but we have had declining revenues for various reasons and here we see spending basically being frozen as much as possible and that’s been taken out of the public wage. The SOEs we see sell-off but they are mostly locked in place and there is pressure to produce something different there.”
Meanwhile, tax experts at the indaba say the country’s tax gap is sitting at R200 billion or 4% of the GDP. The tax gap is the difference between the taxes that should be payable and the tax collected.
“In today’s numbers you are looking at R40 billion-plus on VAT side and frighteningly they estimated that corporate tax gap from corporate is around 2% of the GDP. So, we talking about R100 billion in corporate tax, and from personal income tax, there was a study done by Stellenbosch to around about R46 to 50 billion. If you look at the three we are already getting to R200 billion in terms of the tax gap,” says an expert at PWC, Kyle Mandy.
Other issues to be discussed at the tax indaba will include ethics and standards of taxation, taxation of crypto assets, and corporate tax amongst others.