JOHANNESBURG – The SA Revenue Service (Sars) is gearing up for an overhaul of technological systems in a bid to create a virtual tax jurisdiction as it responds to a rapidly digitised economy.
These long-term plans would include the use of ID numbers as a unique identifier and tax numbers to track a citizen from birth and throughout their taxpaying lives.
The revenue service is currently repositioning itself following issues of governance and integrity, and it was also affected by corruption.
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Tax collection has dwindled as it reported R57.4 billion in revenue shortfalls for the 2018/19 year due to increased tax refunds.
However, big data is changing how the revenue service operates as the rapid nature of technology means there is a need for substantial modernisation of processes and systems.
Sars executive Mark Kingon said that Sars had embarked on a number of projects to address issues with technical capacity, new technology innovations and enhancements.
Kingon said ignoring the effect of digitalisation could potentially have a negative effect on revenue and the fiscus. “We have been preparing by signing collaboration agreements with banks; insurance companies; investment companies; financial advisers – and we are working on building a technology system that will collate and store taxpayer data,” Kingon said.
“Even with government, we recognise the need for synchronising systems and modernising essential services like that of the Master’s office to streamline the administration of trusts. We are currently working with that office to assist in this process.”
Kingon was speaking at the opening of the two-day SA Institute of Chartered Accountants tax symposium in Pretoria on Wednesday. He said the pace of innovation and change was dynamic, and Sars needed to be prepared to understand the potential impact of these developments on its service offerings.
“We are looking at issues both for now and in the longer term, like using an ID number as a unique identifier and a tax number,” he said. “This will allow Sars to track a citizen from birth and throughout their taxpaying lives and to monitor taxpayer behaviour as it relates to compliance.”
Shifting to multinational companies, Kingon said it was imperative for tax authorities to develop stronger and more capable ways of exchanging information to track and monitor trading activities of these companies.
He said the ability of taxpayers to claim tax citizenship in different countries also created concerns for developing economies like South Africa. “In a world where tax residency no longer has the national, narrow focus that it used to have, we need to recognise this critical risk factor and build it into our strategies,” he said.
“With the growing capacity of the internet as a global highway for taxable services and products, we have to have clear definitions of how and what constitutes taxable activities or products.”
Kingon also addressed the leadership crisis at Sars as a number of executives face charges and addressed concerns over rebuilding of the institution. Last week, two Sars executives – Mmamathe Makhekhe-Mokhuane, the head of IT; and group executive of employee relations, Luther Lebelo – resigned after they were suspended for misconduct. The two were part of the five executives placed on precautionary suspension in recent months pending the conclusion of their disciplinary process.
Kingon said Sars had experienced a larger than normal number of resignations, suspensions and disciplinary hearings among critical staff. He said the leadership period that was investigated by the Nugent Commission had resulted in a growing culture of distrust and fear; levels of trauma and hurt, a sense of racial tension, which all led to a deeply demoralised staff.
“Key leadership and technical expertise had left the organisation and yet the revenue target remained. It was a daunting task indeed to be expected to deliver a key source of revenue, whilst facing these dilemmas,” Kingon said.
“Externally there was a major trust deficit in Sars. A voluntarily compliant taxpayer, if not treated fairly, will always be a challenge. I do believe that we can rebuild our brand and repair the trust deficit; however, we cannot do that by ourselves.”