Supplementary Budget 2020

5-point plan to rebuild SARS and improve tax collections

SARS boss Edward Kieswetter has inherited a "broken" organisation and it is impacting tax revenue collections, according to tax experts.

At a briefing this week, ahead of the mini-budget, tax experts of Mazars weighed in on the current status at SARS.

According to data from Treasury, revenue collections at August 2019 are just more than a third (37%) of the revenue target of R1.422trn for the 2019/20 year. Tax experts have said this is a combination of a sluggish economy and the fact that Kieswetter has to rebuild capabilities at SARS which were eroded during the reign of former boss Tom Moyane.

"The morale is extremely low. There are people who are extremely hurt by what has happened," Mazars national head of taxation services Mike Teuchert told journalists at the briefing.

Teuchert was among industry players who met with Kieswetter following his first 100 days at SARS. Speaking on the engagement with Kieswetter, Teuchert said that the commissioner had taken time to understand the state of the organisation to take it forward.

Now that Kieswetter has identified the issues, he is slowly addressing them, he added.

Kieswetter has also been cognisant of implementing the Nugent Commission's recommendations to help turnaround the tax agency, by suspending staff implicated in bringing down the organisation. So far three officials have exited SARS, Fin24 previously reported.

Work is also being done to improve SARS' internal fraud discovery processes, Teuchert said.

"We have a capable person heading up an organisation and who is starting to assemble a capable team. It is a long game for him but he is slowly starting to put the right steps in place to become an effective organisation," said Teuchert.

When asked what Kieswetter could do to improve capabilities at SARS, Teuchert and Mazars tax partners Bernard Sacks and Graham Molyneux shared several views:

1. Recruiting capable staff

Teuchert noted that SARS has lost "good" and capable people in the past and now Kieswetter has to replace them. "He (Kieswetter) must pay attention to get the right people on the bus, in the right seats."

Teuchert commented that apart from ensuring SARS becomes an attractive employer, it will also have to make sure the people recruited have the necessary experience to work at an organisation as sophisticated as SARS.

"A certain amount of training and experience is needed to get them (new recruits) up to speed," he said.

2. Developing digital capabilities

One of the big things Kieswetter has been championing is making it easy for taxpayers to comply with regulations by introducing initiatives to make the filing of their returns more convenient, Teuchert said.

The e-filing system has been adjusted to be more user-friendly and responsive, and SARS launched an app to assist users in filing their returns. "He (Kieswetter) is creating an environment in which it is easy to comply, because he fundamentally believes people want to comply," Teuchert said. He added that Kieswetter is aware some people would not be open to complying and want to avoid paying taxes.

Even though SARS has promoted the e-filing platform for taxpayers to file returns, it has experienced a few glitches, Fin24 previously reported.

"SARS made changes recently which were not well effected," Teuchert commented. SARS should work on enhancing the e-filing platform and effect the changes successfully, he explained. It appears the current system cannot handle the volume of 14 million taxpayers, he added.

3. Public trust

Molyneux shared views that SARS should work on restoring the confidence of taxpayers in the system.

"People have been dealt with poorly by SARS," he said.

Part of this includes building relationships with corporate taxpayers. Molyneux suggested the large Business Centre, recently reestablished by Kieswetter, can help in this regard.

Sacks added that Kieswetter acknowledged that there is a dent in public trust which needs to be restored, both externally and within the organisation.

4. Collaborating with international tax authorities

Teuchert shared that SARS should play an increasing role in collaborating with other global tax revenue agencies through the automatic exchange of information programmes. This means SARS can receive offshore third-party financial data from other tax authorities, and in turn provide data to other authorities.

Being able to exchange information will equip SARS in countering negative risks of tax avoidance. "SARS has been on the programme and they need to up their game on using big data to get corroborating evidence from other sources," Teuchert said.

5. Cracking down on organised crime

Sacks added that Kieswetter is "up against" organised crime, especially in the space of illicit trade. "I do not think it's something SARS will have to deal with on their own. They would need assistance from the criminal justice system," Sacks said.

He stressed that it is important to purge the organisation of all corruption.

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