Often dreaded by the public for the paperwork associated with the filing of personal income tax returns, the South African Revenue Service (SARS) has come a long way since the advent of democracy in the country 18 years ago, in making it easier for taxpayers to honour their obligation.
Established by legislation to collect revenue and ensure compliance with tax law, the vision of SARS is to be an innovative revenue and customs agency that enhances economic growth and social development.
The main functions of SARS, which is autonomous of the state, include the collection and administration of all national taxes, duties and levies. The annual submission of a tax return is a requirement by law.
With such an arduous task resting squarely on its shoulders, SARS quickly discovered that the best way to get South Africans to effectively use its services was to be a serious player when it comes to innovation.
Since the dawn of the democratic dispensation, the manner in which personal income tax is collected in South Africa has come a long way. Few, if any, would disagree that the introduction of eFiling has changed the way South Africans interact with the revenue service.
Back in 2001, the eFiling service was outsourced to several companies. "At the start it was just VAT. Then we added IRP6S as well and that was a charge process and we found that it wasn?t working and we took it over,' says Mark Kingon, Group Executive: Service/Escalation and Support Operations at the revenue service.
In 2006, SARS started developments to expand the eFiling system to the filing of tax returns.
"The first year we did a very small number, only 40 000 (returns) but it was a very rudimentary system. It wasn?t something we pushed. But in 2007, we moved to a new form where a client could do it [their return] in two pages,' explains Kingon.
The number of eFilers rocketed that year, with close to a million people submitting their returns electronically. Over the years, the number of people who complete their end-to-end tax process and get their assessment and their statement of account online, without having to visit a SARS branch, has increased.
"In 2007, we really had nothing and today we have a vast majority of people using this as a submission channel,' says Kingon.
According to the SARS Annual Report 2011-2012, the number of individuals registered for income tax grew dramatically year-on-year from 10.3 million taxpayers in 2010/11 to 13.7 million taxpayers in 2011/12.
However, Kingon concedes that there were teething problems with the development of the eFiling system.
"In any new development, I think that there are always challenges in making sure that you?re making an offering that?s accessible to all,' he said. The revenue service?s electronic filing has managed to gain the confidence of citizens.
"To get people to trust the eFiling platform was probably the biggest challenge, but we managed to do that. There?s a huge trust in the system,' said Kingon.
To comfort any fears, the system requires no human hand unless if going for an audit review, whereas previously, every single return was reviewed by person. Some of the challenges faced included system capacity due to people?s penchant for leaving things to the last minute.
This, however, has been fully addressed now. In early September 2012, SARS announced that additional help for taxpayers using eFiling had gone live. For filers requiring help while completing their tax returns, the Help-You-eFile service, allows individuals to be in direct contact with a SARS Call Centre agent while they complete their tax return online.
With permission from the taxpayer, the facility enables a call centre agent to access the taxpayer's eFiling browsing session at the same time as the taxpayer and to see exactly what the taxpayer is seeing.
When clicking on the Help-You-eFile icon on their eFiling profile, a taxpayer will be prompted to accept the Terms and Conditions. They will then receive a Help-You-eFile session reference number on their eFiling profile.
The taxpayer will then need to call the SARS contact centre on 0800 00 7277, quoting their reference number to the call centre agent who responds.
To date, however, there are no sufficient statistics on whether older or younger people use this facility. "We still believe there are a lot of people out there who can file on a computer but they?re too scared to do it.
They?d like their hand to be held and so we?ve now got the Help-You-eFile and it?s essentially a hand holding exercise in a very secure fashion,' says Kingon.
Do the public like this? It seems public response to this service has been encouraging.
"We are helping around 180 [people] a day. I would have expected more but we are in a low season but we will pick up when we get to 23 November - the deadline for electronic submissions.'
Other technology forms brought on board by SARS recently is the eFiling mobisite application. Introduced in September, the App allows taxpayers to complete and submit their tax returns, a first for revenue authorities on the continent.
Using the application, users can submit their individual Income Tax Return (ITR12); view their notice of assessment (ITA34); view their Income Tax Statement of Account (ITSA) as well as view their tax calculator.
For taxpayers to be able to submit their tax return using the SARS eFiling mobisite or App, taxpayers must first register for SARS eFiling from an internet-connected PC or laptop at SARS Once registered, users can then eFile from their mobile device or tablet.
To access the mobisite, taxpayers can use their cell phone's internet browser and visit sarsefiling For Apple devices, users can visit the App store.
"The fact of the matter is that many people do not have access to a computer but they do have access to a cell phone,' says Kingon of the innovation.
To be sure of the quality of technologies SARS puts out there, Kingon says pilots of all technologies were run before going live.
"It?s important that we must make sure that we roll out things that are reputable and stable.'
Best of all, the technologies have all been developed in South Africa.
Are South Africans tax compliant?
With all the amazing technology that is designed to essentially make the filing of tax returns easier, the gap for those who are not tax compliant is getting smaller by the year. However, Kingon says the challenge of compliance still remains.
"Each country has got different challenges. Compliance continues to be a challenge to us; however, due to our processes, there are far less places to hide today.
"We are able to determine the data of every single person employed in the country and also from the financial institutions, we are getting all the people that have bank accounts. We can generally close the doors and see who is non-compliant, so we are able at a far better way of getting the crooks out there to make sure they comply.'
However, there are people that still want to play the system and this was evident in plain fraud cases where people wrongfully claim deductions; or cases of sophisticated tax schemes, where it becomes more a question of tax avoidance where people interpret the law to suit their point of view.
In the Annual Performance Plan 2012/13, analysis had shown that a substantial number of high-net worth individuals are under-declaring their income, which results in significant revenue losses.
"Collaboration with banks has indicated that there are between 10 000 to 20 000 individuals that meet the high-net worth threshold, i.e. either R7 million in annual income or R75 million in assets. Only between 2 000 and 3 000 of these high-net worth individuals have declared this income to SARS,' noted the report.
In the 2012 Tax Statistics Report, it was revealed that the tax register for individuals surged 74.7%, from 10.3 million in 2010/11 to 13.7 million in 2011/12, following a new SARS policy which requires that all employers register all employees, regardless of their income.
From October 2012, the revenue service introduced a permanent voluntary disclosure programme (VDP). The previous VDP, which aimed to encourage tax defaulters to disclose their tax defaults, resulting in them receiving relief from penalties, ran from November 2010 to October 2011.
On whether all applications from the previous VDP had been processed, Kingon said this was likely to only be completed next year.
"There?s a considerable amount to be done and we will finish processing those in the latter half of next year,' he said.
The new VDP, however, operates differently. "The first VDP expired last October and then from the first of October this year, the new VDP opened but there are different rules applying to the old and the new VDP.
"The old was more generous than the new one. The old was a full waiver of interest and the new is only about a 50% waiver,' notes Kingon.
Meanwhile, SARS has been running mobile units in the Eastern Cape, KwaZulu-Natal and the Free State to assist those who live far from its branches. The revenue service has introduced three mobile units operating in these provinces to service rural areas.
SARS places ads in the local newspapers to inform people of the mobile units which offer full services offered by branches.
The units have been running for a year, with SARS looking to expand this.
What does the future hold for SARS?
With a long and proud history of innovation and the need to continually do things better, one?s imagination is the limit when it comes to predicting what lies ahead for the revenue service.
Kingon?s stable, prudent vision for SARS is indicative of an institution that has its sights firmly set on being among the best revenue services in the world.
"The future for any revenue service is to be able to populate the tax return with all the data, that you don?t have complete any aspect. That?s the future.
We actually just give you an account.
"We?re partially down that road because we?re getting medical aid data and retirement annuity data. I?d love to get to a place where we simply send people their assessment, saying you?re getting a refund or you pay us. No revenue service is really there. We are generally on the cutting edge,' said Kingon.- SAnews.gov.za
What do you think?
How has the innovative methods introduced by SARS improved the tax system and how has it affected the economy?