SARS aims to deal with the 'morally corrupt'
The South African Revenue Service (SARS) saw nearly two million taxpayers who tried for refunds that were not allowed – some of which were "downright criminal," Commissioner Edward Kieswetter has said.
And it's not only fraudsters and tax evaders who came under the microscope. In addition to an "onslaught" of claims that were actually fraudulent, the lion's share of nearly R3 billion in home office expense claims simply failed to pass muster, Kieswetter said.
Despite this, however, the SA Revenue Service paid out a record amount in tax refunds this year.
Meanwhile, it collected R1.56 trillion in the fiscal year through March 2022, R16.7 billion more than projected in the 2022 national budget and 25% more than the prior fiscal year.
The audit process alone applied to tax returns selected for verification yielded R41 billion of impermissible fraud.
Speaking to Fin24 on the side-lines of an event hosted by Wesgro, the official Tourism, Trade and Investment promotion agency for Cape Town, Kieswetter said in the wake of the state capture years, it was crucial to clamp down on corruption at whatever scale.
"Unfortunately, we all look honest, but there are those who try to fiddle with the tax system. So, corruption and wastage are not our friend at SARS. We must, therefore, both intimidate and inspire in our vision of transforming the well-being of South Africa and its people. And also call out state capture for what it was."
He said SARS was balancing protecting the integrity of the country's revenue system with being a friendly face to taxpayers – "even knowing some have the intention to steal".
State capture dealt a heavy blow to the tax agency, and now Kieswetter says the reality SARS must face is that "some [people] have become morally corrupt and will stop at nothing to continue to pilfer, steal or create economic crime".
But the overwhelming majority of taxpayers are happy with the service they have received at SARS, he stressed, pointing out that more than 88% of individual taxpayers were satisfied with the service provided. And of about 382 000 taxpayers who made minor changes to applications for refunds, 93% received an assessment outcome in under five seconds, while 82% got refunds in under 72 hours.
Risk
Kieswetter says no one is above scrutiny.
"Our risk engine is merely calibrated to highlight any situation that looks odd or irregular. We draw on third-party data to see if the income someone declared matches their lifestyle - even for churches and church leaders. We also look at companies' income statements compared to the VAT they declare," he explains.
"We came across 1.87 million instances where taxpayers tried to obtain a refund from SARS that was not permissible. Some of these attempts are downright criminal. We received a daily onslaught of people pretending to be trading and registering companies and manufacturing invoices to defraud the system."
That being said, SARS gets between 3.5 million and four million VAT returns, of which only about 10% are selected for audits. Of these, 75% had their audits completed within 21 days.
Asked for advice for South Africans working from home - SARS disallowed about R1.8 billion of the R2.9 billion in home office expense claims - Kieswetter says it is best to consider if it is indeed worth claiming. Do not to just "try to take a chance".
SARS hosted webinars and issued statements to ensure taxpayers were informed about what and how one can claim.
"If you have bona fide office as required by law and incurred bona fide expenses, your claim will be honoured. But if you try to nitpick here and there, you will come up in our radar," says Kieswetter. "We are discussing with Treasury about how the world of work is changing and how more people work in a hybrid situation, but for now the law stands as it is."
Kieswetter admits the revenue service still has a long road ahead.
"No one is more disturbed by a tweet that says we did not fulfil something or did not respond to a request we undertook to resolve. We have a long way to go, due to the level of disrepair at SARS caused by state capture – I don't think South Africans really understand that," he says. -Fin24
And it's not only fraudsters and tax evaders who came under the microscope. In addition to an "onslaught" of claims that were actually fraudulent, the lion's share of nearly R3 billion in home office expense claims simply failed to pass muster, Kieswetter said.
Despite this, however, the SA Revenue Service paid out a record amount in tax refunds this year.
Meanwhile, it collected R1.56 trillion in the fiscal year through March 2022, R16.7 billion more than projected in the 2022 national budget and 25% more than the prior fiscal year.
The audit process alone applied to tax returns selected for verification yielded R41 billion of impermissible fraud.
Speaking to Fin24 on the side-lines of an event hosted by Wesgro, the official Tourism, Trade and Investment promotion agency for Cape Town, Kieswetter said in the wake of the state capture years, it was crucial to clamp down on corruption at whatever scale.
"Unfortunately, we all look honest, but there are those who try to fiddle with the tax system. So, corruption and wastage are not our friend at SARS. We must, therefore, both intimidate and inspire in our vision of transforming the well-being of South Africa and its people. And also call out state capture for what it was."
He said SARS was balancing protecting the integrity of the country's revenue system with being a friendly face to taxpayers – "even knowing some have the intention to steal".
State capture dealt a heavy blow to the tax agency, and now Kieswetter says the reality SARS must face is that "some [people] have become morally corrupt and will stop at nothing to continue to pilfer, steal or create economic crime".
But the overwhelming majority of taxpayers are happy with the service they have received at SARS, he stressed, pointing out that more than 88% of individual taxpayers were satisfied with the service provided. And of about 382 000 taxpayers who made minor changes to applications for refunds, 93% received an assessment outcome in under five seconds, while 82% got refunds in under 72 hours.
Risk
Kieswetter says no one is above scrutiny.
"Our risk engine is merely calibrated to highlight any situation that looks odd or irregular. We draw on third-party data to see if the income someone declared matches their lifestyle - even for churches and church leaders. We also look at companies' income statements compared to the VAT they declare," he explains.
"We came across 1.87 million instances where taxpayers tried to obtain a refund from SARS that was not permissible. Some of these attempts are downright criminal. We received a daily onslaught of people pretending to be trading and registering companies and manufacturing invoices to defraud the system."
That being said, SARS gets between 3.5 million and four million VAT returns, of which only about 10% are selected for audits. Of these, 75% had their audits completed within 21 days.
Asked for advice for South Africans working from home - SARS disallowed about R1.8 billion of the R2.9 billion in home office expense claims - Kieswetter says it is best to consider if it is indeed worth claiming. Do not to just "try to take a chance".
SARS hosted webinars and issued statements to ensure taxpayers were informed about what and how one can claim.
"If you have bona fide office as required by law and incurred bona fide expenses, your claim will be honoured. But if you try to nitpick here and there, you will come up in our radar," says Kieswetter. "We are discussing with Treasury about how the world of work is changing and how more people work in a hybrid situation, but for now the law stands as it is."
Kieswetter admits the revenue service still has a long road ahead.
"No one is more disturbed by a tweet that says we did not fulfil something or did not respond to a request we undertook to resolve. We have a long way to go, due to the level of disrepair at SARS caused by state capture – I don't think South Africans really understand that," he says. -Fin24
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