In a recent announcement, Sage confirmed that from the 1 October 2019 they will no longer provide tax and compliance advisory services to customers in South Africa, the rest of the Africa region and Middle East.

This is a massive announcement for the industry as many users of Sage have benefited over the years from their regular tax and statutory updates as well as the comfort they could rely on the software to provide them with outputs consistent with the legislation.

I am sure it could not have been an easy decision for Sage to make and we can only speculate that this reflects the increasingly difficult environment we find ourselves in where maintaining compliance is extremely difficult not only because of the complexity of our legislation, but also because of the differences in interpretation applied by the authorities. This creates significant risk for software developers and we assume must have played a key part of Sage’s decision.

The challenge for employers using the Sage products is that while they have committed to trying to make the software compliant they have suggested clients contact tax practitioners (business partners) about compliance issues. The real burden for linking what tax practitioners then say about the legislation and what actually happens in the payroll system will fall on the customer significantly increasing the risk of getting things wrong (and facing the consequences).

The advantage of having a compliance support function within a software developer is the ability to practically think through new legislation before developing solutions and also being the first to hear about issues that arise with clients. This feedback loop is now gone.

I believe this will make it harder for Sage to continue offering a quality product (hopefully I am wrong) and make it harder for internal payroll administrators to do their jobs – they will now be fully responsible for compliance and won’t be able to fully rely on the system.