SARS calling in the big guns

The South African Revenue Service (SARS) recently put out a tender for tax consulting services, and some of the country’s largest auditing and legal firms are all looking for a piece of the pie.

This is according to Tax Consulting South Africa’s Jashwin Baijoo, who said some of the biggest audit and law firms are looking to assist the taxman.

This comes after SARS announced a new tender in August this year to appoint a panel of tax specialist consulting firms. This is the agency’s latest move to increase tax compliance in South Africa.

“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.

Baijoo said some of South Africa’s Big 4 Audit firms and Big 5 Law firms attended the tender briefing held in September. However, not all of them made it onto the final bidder list, which SARS published on 1 October 2024.

The Big Four audit firms in South Africa are Deloitte, PwC, E&Y and KPMG, and the Big Five law firms are Bowmans, Cliffe Dekker Hofmeyr, ENSafrica, Webber Wentzel, and Werksmans.

Baijoo said that, from over 150 attendees in the briefing session, the final list revealed only 58 bidders. The most noteworthy name on the lift is Deloitte & Touche, one of the world’s largest audit firms.

Baijoo explained that this tender was made because SARS is looking to outsource more specialised roles on an “as and when” basis. 

This includes international tax, with a focus on profit shifting and transfer pricing on the corporate side.

From an individual taxpayers’ perspective, the tender seeks specialists to conduct in-depth and often forensic audits of complex financial transactions and wealthy taxpayers.

This is something the Big Audit and Law firms are well known for, just from the ‘other side’.

With these firms’ help, SARS is looking to further make non-compliance hard and costly, while streamlining its processes and increasing efficiency. 

Baijoo said SARS Commissioner Edward Kieswetter is a strategic mover and may have a larger strategy in play with this tender. However, for now, there are two clear trains of thought that can be identified:

1. SARS is aware of its internal shortage of skilled senior officials and aims to remedy this through the private sector and increase capacity to crack down on taxpayers. This will gear predominantly toward increased revenue collection for SARS.
2. From a most taxpayer-centric ethos, the other speculation is that SARS is building systems and capacity to create a more user-friendly and seamless taxpayer experience and promote voluntary tax compliance. This is more of a “first-time correct” model and will bolster taxpayer trust and confidence in the revenue collector.

“Being a pilot project, it is not entirely clear what the end result will be, and if privatisation of tax collections will yield just better revenue collections, or if also to the benefit of the South African taxpayers’ experience,” Baijoo said.