The South African Revenue Service (Sars) is trying to mend its relationship with big business to increase compliance and tax collections by the end of the financial year.
As a matter of urgency, Sars will be reintroducing the large business centre, a one-stop shop that dealt with corporates with a turnover of more than R100-million a year. Other changes relate to services, such as enhancing the e-filing platform and automating and improving the tracking of imports and exports.
The business centre was one of the units that were dismantled when commissioner Tom Moyane restructured Sars’ operating model based on advice by consulting firm Bain & Company. His moves have been blamed for compromising Sars’ efficiency and partly for the exodus of highly skilled officials.
Moyane is on suspension and faces a disciplinary inquiry over allegations that include untoward matters related to a Financial Intelligence Centre report, bonus payments without authorisation and misleading Parliament.
Narcizio Makwakwa, Sars’ acting group executive for relationship management, said the revenue service had noticed that tax revenue from the large corporates had dropped sharply, which is why it had to refocus on that area.
“They are not the way they used to be. Their numbers used to grow at 8% to 10% but now you are lucky to get 5% and 6%,” Makwakwa said.
Sars has not met its revenue collection targets for the past two years. Last year, former finance minister Pravin Gordhan, who is now the minister of public enterprises, announced a revenue deficit of R30.7-billion. This year the deficit rose to R48.2-billion.
In the first round of hearings of the Sars Commission of Inquiry into Tax Administration and Governance, the former head of the large business centre, Sunita Manik, said it contributed 30% of the total collected by Sars annually.
“There was urgency to move on the large business unit,” Makwakwa said. Although no implementation date had been decided on, work was under way to have it in place before the end of the financial year.
Makwakwa said Sars could not put an exact figure on the extent of drop in the revenue collected from the corporates, although the companies themselves had blamed the drop on a slow economy.
“The issue here is, because we do not have a dedicated focus on the large business environment, we are not doing as well as we could have in as far as verifying certain things that they [business] give us are concerned.”
Makwakwa said the revived unit would allow Sars to better assess how much of the drop was because of the economy and what percentage was because of Sars’ inefficiency.
“We just don’t want to blame it on economic fundamentals because sometimes people use economic fundamentals to hide some of the schemes that they are using to make sure that they don’t pay taxes,” he said.
Making Sars’ e-filing platform easier to use to improve compliance would also be on the agenda. He said registration was cumbersome and resetting passwords was complicated.
“We want to come up with a simplified way of doing registration so we can encourage you to go online,” he said.
Sars also wants to make changes to its customs services, one of which is to automate the tracking of imports and exports, from beginning to end. Businesses will be able to inform Sars of what goods and the volume they are moving so that, by the time the goods get to the border, officials already have an understanding of what’s being transported.
“That way you don’t have to wait days or weeks for your goods to be cleared. We will have the information advanced and we will prepare everything in the back end.
“Our idea is we need to provide an efficient service because we want to facilitate legal trade. If you are a legal person, we don’t want you to have too much trouble,” Makwakwa said.
Tebogo Tshwane is an Adamela Trust business reporter at the M&G