2021 Budget Speech commentary – SARS investment in technology and infrastructure

2021 Budget Speech commentary – SARS investment in technology and infrastructure

Business, Tax

One interesting element of the 2021 budget is the fact that SARS will be allocated R3 billion to upgrade its technology and infrastructure systems and expand its specialized audit and investigative skills to prevent tax avoidance.

It was also made clear that with SARS investing in technology and data to evaluate the complex tax structures of wealthy South Africans, that these affluent taxpayers would be put in the spotlight as the first step in recovering what they believe are large amounts of money that are slipping through the tax net.

The minister also mentioned leveraging the Davis Tax Committee’s insights, suggesting that this will be a continued focus for SARS.

SARS will be using the allocated funds to attract technically skilled personnel and increase the organization’s data-gathering capabilities. This includes expanding and increasing the use of data using machine learning algorithms and artificial intelligence to connect the dots and, also a very modern digital platform in which taxpayers can easily engage with SARS.

Finally, SARS will be focusing on areas where there is still aggressive non-compliance. The abuse of asset losses, transfer pricing and the use of complex arrangements and offshore vehicles to try and mask their tax obligations will be the first areas of focus.

An automation and digital migration process that started in 2020 will be continued, considerably reducing manual intervention and improving efficiency and turnaround times.

It is interesting to note that the increased budget allocation will only be from 2022/23. This possibly suggests that the hard work that is currently being done by the new Commissioner and his team will lead to improvement in efficiency and collections in the coming year. What is certain is that the Treasury is banking on a very big year from SARS.

Those individual taxpayers and companies who have been shunning compliance and not paying their share had better get their house in order fast, as it is matter of time before SARS come knocking. SARS will be utilizing the maximum penalties at their disposal to punish transgressions going forward.