SARS’s new tax weapon

The South African Revenue Service (SARS) has announced a new tender to appoint a panel of tax specialist consulting firms. This is the agency’s latest move to increase tax compliance in South Africa.

This is according to Jashwin Baijoo, Tax Consulting SA’s associate director and head of strategic engagement and compliance.

Baijoo said SARS announced this new tender on 26 August 2024, which will see the appointment of a panel of specialist tax consulting firms for five years. 

“SARS will immediately be able to gain access to the best private tax minds in the country to help catch tax evaders, tackle non-compliance as well as get additional tax brainpower to deal with highly complex and sophisticated tax structures,” Baijoo explained.

He said the tender does not clearly state how many panel members will be appointed. However, each panel member can submit the resumes of up to 88 tax specialists, ranging from junior to senior tax professionals.

Furthermore, the tender covers all tax types and various technical and tax compliance-related items.

Baijoo explained that SARS’s two main challenges are having enough quality resources and expertise to understand the most complex tax avoidance or evasion schemes.

He said this tender and the appointment of tax specialists will ensure that these challenges are “almost instantly fixed”. 

“The capacity of SARS to take on far more complex tax matters, including forensic audits and corporate restructures, will immediately be bolstered,” he said. 

“The same tax practitioners who have for years complained about SARS not doing enough to combat aggressive tax structures punted by some firms or advisors, as well as those frustrated by widespread and blatant poor service delivery, can now join ‘Team SARS’.”

Most notably, Baijoo said the panel, once appointed, will also engage in taxpayer and trader communications, telephonically, by written correspondence, and through virtual meetings.

The panel will be empowered to raise assessments, conduct audits, and even collect taxes due to SARS, fulfilling the revenue authority’s mandate.

He explained that it is not new that you need to have private practice expertise to be a good Revenue Collection Official and vice versa. 

Dr Keith Engel from the South African Institute of Taxation in the US Treasury has previously said there is a desired component of private sector experience before you can get a senior appointment. 

Serving in the private sector lets a tax collector know where to look and how to ask the right questions. 

“There are protection mechanisms built into the United States Code to protect against abuse, and this SARS new initiative appears to incorporate some of the same principles,” Baijoo said.

He said SARS cannot make its zero-tolerance policy for taxpayer and trader non-compliance clearer. 

This latest initiative, enlisting specialised tax consulting and compliance services from the private sector, means that taxpayers on the wrong side of the law will have a higher risk of detection, and tax-aggressive schemes will face even better technical scrutiny.

“Taxpayers who feel that their compliance may not be up to standard should get a good independent look,” he said. 

“This is ideally done by a tax firm which has the depth of expertise to deal with tax planning and compliance, as well as where engagements are under tax attorneys who ensure tax legal privilege.”

“We see in daily practice how a taxpayer’s lifelong work and dedication to wealth creation gets materially harmed by SARS throwing the book at someone.” 

He said the approach to first come clean through a well-designed roadmap and SARS’ Voluntary Disclosure Program remains invaluable where correctly executed.