South African corporate income taxpayers are losing trust in the South African Revenue Service (SARS) due to increased delays in completing audits and difficulty communicating with the tax authorities.
This was revealed in the Taxing Times Survey 2023 from PwC, which analysed corporate income taxpayers’ recent encounters with SARS.
The survey showed that 53% of respondents say they received quality service from SARS, a massive improvement of 14% from 2022.
However, most respondents said their trust in the revenue service has declined since 2022, with 58% responding negatively when asked if their trust in SARS had improved.
Lead partner in tax controversy at PwC, Elle-Sarah Rossato, told Newzroom Afrika that SARS’ leadership has a big task ahead to rebuild the institution after state capture significantly weakened it.
Rossato said that many of the corporates pointed to delays from SARS in concluding audits as reasons for their declining trust.
There have been average delays of three to six months for relatively simple corporate income tax audits.
More complex audits, particularly those involving transfer pricing from international transactions, have been delayed by 12 months.
Despite making good progress, Rossato believes a lot of energy and time still needs to be spent on increasing SARS’ efficiency.
The first port of call to resolve this is for SARS to attract and retain talented employees who can efficiently deal with complex tax matters.
This issue is compounded by difficulty communicating with SARS regarding outstanding tax payments or clarity about a company’s tax matters.
However, there have been some notable improvements over the past 12 months, particularly regarding VAT refunds and personal income tax.
SARS has reduced its VAT refund turnaround time significantly, Rossato said, with the service paying out more than R212 billion in refunds in the first six months of the current financial year.
The revenue service has also spent millions of rands and plenty of time implementing artificial intelligence and machine learning to increase the efficiency of its personal income tax collection.
This has resulted in the number of auto-assessments increasing to 2.7 million taxpayers, making the process more efficient and easier for taxpayers.
SARS has also improved its voluntary disclosure programmes, making it easier for taxpayers to self-report infringements and settle with the tax authorities.