With tax filing season well under way, the South African Revenue Service (Sars) seems to be pulling out all the stops to get back on track and to collect taxes efficiently and effectively, says Ettiene Retief, the chairperson of the national tax and Sars committee at the South African Institute of Professional Accountants (SAIPA).
“The near-disastrous changes to the operating model of the tax authority under suspended commissioner Tom Moyane have led to a decline in tax morality and revenue collection. Acting commissioner Mark Kingon has, however, vowed to tweak things, to collect the taxes the government needs,” he says.
Retief says structural changes made under Moyane included the dismantling of the Large Business Centre (LBC), which focused on large and multinational companies and high-net-worth individuals. These two categories of taxpayer are responsible for a large chunk of the tax revenue collected by Sars. Their tax affairs are generally complex, and there are risks for the fiscus if they are not managed properly, he says.
Retief says SAIPA fully supports the refocus on the LBC and the re-establishment of functionalities that will allow Sars to collect revenue more efficiently and effectively.
He says the tax affairs of rich South Africans require specialised skills, because their risks are vastly different to those of the average taxpayer. They generally have complex trust structures, deductions for venture capital company investments, loans and beneficial ownerships that requires a different set of auditing skills.
Retief says there is sufficient evidence to suggest that there has been a deterioration in auditing efficiency at Sars. An audit of the average taxpayer is not supposed to take more than four months.
“There has to be a balance between an efficient auditing process and happy taxpayers who are not unduly frustrated or disadvantaged,” he says.
Retief says Sars will have to restore the faith taxpayers had in the tax authority and how it collects taxes.
“Government needs to gain taxpayers’ trust in how it is spending their money. There must be a change in the ethos of the business. Taxpayers who are compliant should be respected.”
Retief supports the shorter filing season, saying it will lead to an increase in compliance and collections.
- Taxpayers submitting paper income tax returns have until September 21 to do so. Filing season will close at the end of October for taxpayers using eFiling. Provisional taxpayers have until the end of January next year.