Albert Einstein once famously said “The hardest thing in the world to understand is the income tax”.
SARS recently published its Annual Performance for the 2022 fiscal year, which details all aspects of SARS’ mandates, its revenue collection and the extent to which it achieved its 9 strategic objectives.
The 9 strategic objectives directly relate to how taxpayers engage with SARS and their experiences with the tax office. The objectives of SARS are:
- Provide clarity and certainty for taxpayers and traders of their obligation
- Make it easy for taxpayers and traders to comply with their obligations
- Detect taxpayers and traders who do not comply and make non-compliance hard and costly
- Develop a high performing, diverse, agile, engaged and evolved workforce
- Increase and expand the use of data
- Modernise our systems to provide digital and streamlined online services
- Demonstrate effective resource stewardship to ensure efficient and quality outcomes
- Work with and through stakeholders to improve the tax ecosystem
- Build public trust and confidence in the tax administration system
In this article we highlight the significant outcomes from the Annual Report, specifically insofar as it relates to strategic objective 1, which centres around the certainty faced by taxpayers in fulfilling their obligations:
- In 2020 SARS commenced an annual survey aimed at testing the experiences of taxpayers. This year only 4 648 responses were received from a sample of 348 558 possible participants. This is a participation rate of 1.33%. Although SARS reports that the participation rate is acceptable for studies of this nature, a higher participation rate may have resulted in different outcomes. Nevertheless, we discuss the results from the survey below.
- The annual survey conducted by SARS reported that 69% of taxpayers found the guidance provided by SARS to be clear, unambiguous and easy to follow. This is an improvement from the 2021 results. However, this means that 31% of taxpayers find compliance with tax Acts unclear, ambiguous and difficult to follow.
- One aspect that was highlighted in the Annual Report was inconsistencies and lack of standardisation in the information provided by SARS, which results in taxpayers finding compliance with tax obligations difficult.
- To overcome the uncertainties experienced by taxpayers, SARS embarked on an education and awareness drive, which included several webinars, transfer pricing related programmes and the issuing of interpretation notes, guides and rulings.
- The survey does, however, not appear to test whether uncertainties experienced by taxpayers are restricted to interpretation of the tax Acts, or whether navigating the digital platforms of SARS (such as E-filing, the SARS Mobi-app and the Online Query system) could be contributing to taxpayers’ uncertainties. SARS reported a significant increase in the use of these digital platforms (91.03%) and reports that certain systemic issues were being addressed. The report is unclear about what these ‘systemic’ issues entail.
- Of the R337 billion tax debt due to SARS, a total of R47,319 million is subject to the objection and appeal processes available to taxpayers, where an assessment is disputed. This is a decrease from R50,333 million in the previous year. These numbers suggest that a large number of assessments are under dispute. It appears that improved turn-around time for objection contributed to the improvement of the total debt due to SARS as a result of disputes.
- The report does not indicate whether an improved understanding of the tax Acts may have contributed to the decrease in tax debt under dispute and it would be insightful to know whether the level of uncertainties experienced by taxpayers directly impact on the number of objections lodged against SARS’ assessments.
- This is especially relevant, given that SARS strives to promote voluntary compliance amongst taxpayers, which may be hampered by confusion on the part of taxpayers on what is expected.
SARS’ Commissioner has on various occasions iterated that SARS will make it hard and costly for non-compliant taxpayers. Being certain of one’s tax obligations and how to make declarations to SARS will significantly reduce the risk of being categorised as a ‘non-compliant’ taxpayer. Non-compliance can result in hefty penalties and interest.
Contact us, should you experience any challenges in navigating the tax laws and compliance with them.