The SA Revenue Service (Sars) is looking to step up its tax compliance efforts with a soon-to-be signed memorandum of understanding with the National Prosecuting Authority (NPA).
This is according to Sars commissioner Edward Kieswetter, who said he had established a dedicated unit to listen in to everything happening at the Zondo Commission into State Capture to watch out for tax offences, which often trigger criminal investigations.
A specific unit had been established in this regard and was headed by Mark Kingon, who had been acting commissioner prior to Kieswetter’s appointment.
Sars is working closely with the Special Investigating Unit and the NPA regarding following up on those implicated by the Zondo commission.
Kieswetter said previously that once he joined the tax agency he would look to weed out bad apples left over from the disastrous era of former commissioner Tom Moyane.
“I have engaged the work of senior counsel and we have made significant progress in that regard. Hopefully, in the next month or so we will be able to see some actual progress steps being made,” Kieswetter said.
It’s early days, but Sars is lagging behind its tax collection target for the year ending March next year.
During the first two months of the tax year, Sars collected R175.8 billion in revenue, up 6.8% compared to what was collected in April and May last year.
However, to meet the tax revenue target set in this year’s budget speech, Kieswetter will need to boost tax revenue for the next tax year by 10.4% to achieve the R1.422 trillion target, an increase that the tax agency has not achieved since the 2014 tax year.
If the rate of a 6.8% increase in tax revenues is sustained throughout the tax year, then Sars will collect R1.375 trillion, which will fall short of the target by R46 billion.
Such a shortfall would force government to increase its borrowing and possibly hike taxes next year.
“The reality that people are confronted with is that we have an economy that is not playing its part. We have an economy that in the first quarter contracted. Any growth has come from elsewhere rather than the economy. The prediction for the rest of the year is low growth,” Kieswetter said.
“The extent to which we achieve – any revenue outcome – is a function of the efficacy with which we administer our tax mandate. We come from aperiod where a lot of that capacity has been hollowed out, staff morale has declined, trust has been broken and many employees have become disillusioned.
“The rebuilding of Sars is going to be hard and it is going to be long. This is not an outright fix. If there is anything that I have assessed in the first two months it is just how deep the damage is and how difficult and challenging it will be to rebuild internal confidence and regain trust.”
Kieswetter said that under Moyane’s reign about 60 people who stood up against the previous leadership were marginalised and “some were parked with no work and ignored”.
“I have reassigned them meaningful work,” he said.