South African Revenue Service (SARS) Commissioner Edward Kieswetter said they are improving their digital capabilities to bolster compliance and spot tax dodgers.
Kieswetter told Network of Tax Organisations (NTO) conference delegates that SARS has made good progress in rebuilding following many years of state capture.
Before state capture, SARS was a leader in digital modernisation. However, SARS fell behind in driving technological innovation during the Zuma years.
After Kieswetter took over as SARS Commissioner, he set out to rebuild it into a smart and modern tax authority that could be trusted and admired.
He has managed to allocate additional funds to continue their modernisation journey and improve their digital capabilities.
This was needed to keep up with perpetrators and bring them to book. “Tax crime is proliferating at an alarming rate,” he said.
He said adequate funding is key to innovating and digitising to improve tax compliance and detect tax non-compliance.
Going digital through enabling technologies and increased reliance on data science and artificial intelligence has had numerous benefits.
- Making it easier for compliance. Today, you can receive your tax assessment within 5 seconds or less at the click of a button.
- Exponential growth in the expanded and increased use of data.
- Evident support for digital transformation.
Because of higher investments in recent years, SARS now has good automated systems to process tax returns filed via the revenue service’s digital platform.
Kieswetter said they do not see 90% of the current tax returns. “It comes through the online platform with no human intervention,” he said.
“The computer does its work using machine learning algorithms. If a refund is due, the taxpayer will receive it within 72 hours,” he said.
Another benefit is that the system detects dubious claims related to value-added tax (VAT) and personal income taxes.
“We have prevented the outflow of personal income taxes and VAT of over R70 billion of impermissible or fraudulent refunds,” he said.
To further improve tax compliance, Kieswetter is promoting a single digital identity for every South African citizen.
He said there are far too many identifiers, like identity numbers, passport numbers, tax numbers, and bank account numbers.
He said a single digital identity, which is used whenever you deal with the government, makes things much simpler.
“It is one of the key things I am promoting to serve taxpayers better and to detect the flow of money and address criminal and tax crime,” he said.
Kieswetter also wants the ability to connect the legal ownership of an entity or company to beneficial ownership.
“Very often, rich families put their wealth in companies or legal entities which mask the fact that the family is the true beneficiary,” he explained.
He said this can be solved by a single digital identity, which will clarify beneficial ownership and related issues.