SARS eCommerce tax clampdown

South African Revenue Service (SARS) Commissioner Edward Kieswetter said they are enhancing their digital capabilities to enforce tax complaints better in the eCommerce sector.

Kieswetter said that although they still have a long way to go, they have already significantly enhanced the revenue service’s digital systems.

Most tax returns in South Africa do not require any human intervention. SARS issues 94% of assessments in 5 seconds and auto-assesses almost 4 million taxpayers.

This involves computing numerous data points and algorithms in seconds using machine learning, artificial intelligence, and cloud computing.

Apart from taxpayer convenience, it 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.

However, one area where there are still big problems is eCommerce. This includes online shopping and imports from international players.

Kieswetter said SARS should be connected to the Internet to “become available” for trade that happens online.

He said the first step for a revenue service like SARS is to become aware that a transaction has occurred online.

“When payments are made through banks, they are recorded. When they look suspicious, banks should report it to the financial intelligence centre,” he said.

“That helps to keep track of the flow of information related to transactions, sales, and taxes.”

However, in the online environment, many transactions are masked, and their true values are not declared.

When exported, many trades’ value is overstated because the people behind them can arbitrage a VAT payment.

In other cases, people under-declare the value or mask the nature of goods to limit or avoid a customs payment.

“You need interventions that can trace and profile every transaction. Our customs organisation and modernisation programme seek to do that,” he said.