SARS using AI to catch billions in fraud
Through the South African Revenue Service’s (SARS’s) fraud risk detection process, it has been able to stop fraudulent refunds worth R61 billion, SARS commissioner Edward Kieswetter revealed.
Speaking at a budget review panel discussion hosted by PwC, Kieswetter said data science and artificial intelligence (AI) are integral to SARS’ fraud detection processes and efficiency.
“Of the 14 million returns we have processed to date, through our fraud risk detection, we have stopped 1.7 million – just by doing that, we have prevented impermissible or fraudulent refunds of R61 billion,” he said.
Kieswetter used SARS’ processing of value-added tax (VAT) refunds to explain how the fraud detection process uses AI.
He said SARS receives almost 4 million VAT refunds. Of these, nine out of every ten go through without SARS knowing about it. It is processed, risk-profiled, and refunds are approved through artificial intelligence.
He added that 8 out of 10 VAT returns are stopped and flagged, but most are completed within 21 days.
The returns that are not completed in this time frame are affected by SARS’ “own challenges”, including capacity restraints and uncooperative taxpayers.
The capacity constraints are exacerbated by SARS’s struggle to attract the right type of people. “I have been in the market for two years to get a chief data scientist,” Kieswetter said.
He is busy reviving the institution after allegations of state capture. “Rebuilding SARS has been an incredibly hard slog,” he said.