In his recently delivered Medium-Term Budget Policy Statement (MTBPS), finance minister Enoch Godongwana announced a tax revenue shortfall of R22.3 billion. Every year, PwC aims to assess how easy and efficient it is for corporate taxpayers to comply with their tax obligations through our Taxing Times Survey. Based on the survey feedback, it appears evident that SARS’ nine strategic objectives (listed below) are paying off as its improved technology and debt collection efficiencies have contributed to its 2023/24 record collections of a net amount of R1.7 trillion.
1. Provide clarity and certainty for taxpayers and traders of their obligations.
2. Make it easy for taxpayers and traders to comply with their obligations.
3. Detect taxpayers and traders who do not comply, and make non-compliance hard and costly.
4. Develop a high performing, diverse, agile, engaged and evolved workforce.
5. Increase and expand the use of data within a comprehensive knowledge management framework to ensure integrity, derive insight and improve outcomes.
6. Modernise our systems to provide digital and streamlined online services.
7. Demonstrate effective resource stewardship to ensure efficiency and effectiveness in delivering quality outcomes and performance excellence.
8. Work with and through stakeholders to improve the tax ecosystem.
9. Build public trust and confidence in the tax administration system.
In this report, we reflect the sentiments of 206 corporate taxpayers across 17 industries who participated in the survey. This edition, which is our seventh in the annual series, was conducted from May to July 2024.
The latest findings reflected in our Taxing Times Survey 2024 indicate that almost half (46%) of taxpayers who participated said they ‘disagree’ and ‘strongly disagree’ that it has become easier to comply with their tax obligations. Half of the participants felt that SARS’ service delivery had improved, while 42% said their VAT verifications were completed within 21 days—with a majority (62%) receiving their refund within this timeframe (a 2% increase from 2023).
“The purpose of the report is to annually assess the experiences of corporate taxpayers with SARS, highlighting both their notable achievements and areas of improvement,” says Elle-Sarah Rossato, PwC SA Tax Controversy and Dispute Resolution Partner. “We explore whether taxpayers feel that SARS is succeeding in making tax compliance straightforward, if they experience the clarity and certainty promised, and whether SARS is effectively detecting and addressing non-compliance. Moreover, we analyse how well SARS is managing its processes and people, whether it is fostering a high-performing workforce, and if its modernisation efforts are genuinely simplifying the tax process.”
In addition to measuring taxpayers’ experience and satisfaction with SARS, our survey is also about holding the revenue service accountable to its strategic objectives and ensuring that taxpayers’ experience reflects the efficiency and fairness that should be the hallmark of a robust and efficient tax system.
This year’s survey focused on the following key areas:
- The audit process: corporate income tax (CIT); value-added tax (VAT) and transfer pricing
- Disputes and the debt management process
- The Voluntary Disclosure Programme (VDP) process
- SARS’ service delivery
The 2024 survey results have once again been analysed in line with SARS’ nine strategic objectives in mind, with some of the key findings outlined below:
- Likelihood of being selected for verification: 33% of participants believe it is ‘extremely likely’ that they will be selected for verification, compared to 53% in 2023. In addition, 42% said they are ‘somewhat likely’ to be selected, indicating an aggregate of 75% compared to last year’s 85%.
- Time taken to finalise a verification process: Similarly to last year’s results, 48% of participants indicated that their CIT verifications take between one and three months to be finalised. Eight percent of participants said they are experiencing an extended turnaround time on finalisation of the verification process of 12 months or longer in comparison to 2023 (3%) and 2021 (17%). This increase in prolonged verifications shows a decline in SARS’ efficiency when dealing with verifications in 2024 compared to 2023.
- VAT verifications: This year, there was a slight decrease in the turnaround time regarding the finalisation of VAT verifications with 42% (40% in 2023) of participants saying their verifications were completed within 21 days, while 2% said theirs took more than 12 months to complete.
- Payment of VAT refunds: 62% of respondents said SARS had released their refund within 21 days, while an average of 38% said SARS did not make payment within 21 days, or only did so after follow-up enquiries were made. Overall, it seems like there is a steady climb in terms of SARS’ refund improvement time frame which we trust will continue.
- Disputes and the debt management process: SARS’ debt management function can be used in cases where there is no dispute or even based on the “pay now, argue later” principle between a taxpayer and SARS. Raising a dispute via an objection or appeal does not automatically suspend a taxpayer’s obligation to pay the liability reflected in SARS’ assessment. This year’s results indicate that 39% of participants said their request for suspension of payment was accepted—a 4% decrease from last year. Twenty-four percent of participants indicated that SARS rejected their request for suspension without adequate reasons.
“The feedback from taxpayers reveals areas where SARS can make meaningful improvements. However, it is notable that SARS is making steady progress. SARS has said that for the 2024 filing season, five million taxpayers were auto assessed, with a 98% acceptance rate. This is one way the revenue service is showing its commitment to making the process of enabling taxpayers to comply with their tax obligations easier,” Rossato says.
- Voluntary Disclosure Programme (VDP): Through the VDP, SARS has made provision for taxpayers to voluntarily disclose tax defaults in prior years and fully disclose their tax affairs. Not only does the VDP grant protection to taxpayers against criminal prosecution and relief of certain penalties, but it is also a valuable means of revenue collection for SARS. “As at April 2024, Commissioner Edward Kieswetter announced, in his preliminary revenue collection speech, that SARS had finalised 1,435 VDP applications which contributed R3.5bn in revenue,” says Jadyne Devnarain, PwC SA Tax Controversy and Dispute Resolution Associate Director.
This year, 29% of participants said they made use of the VDP process—a slight decline compared to the previous year’s 35%. This is not good news for SARS’ focus on increased compliance. On a positive note, 43% of participants said their VDP application was finalised within three to six months, which indicates a 10% increase in the turnaround time to process a VDP application from last year’s 33%.
- SARS’ quality of service: We asked participants if they believed the quality of service delivered to taxpayers had improved since the introduction of the SARS Service Charter in 2018. We identified a 6% decrease from 2023, as only 3% of participants ‘strongly agree’ that SARS’ service delivery has improved, while 47% ‘agree’. In aggregate this is a 3% decrease compared to the previous year, indicating that in general taxpayers are not fully satisfied with SARS’ service delivery.
- Compliance with tax obligations: An aggregate of 54% of taxpayers indicated that it has become easier to comply with their tax obligations—a 3% improvement from the previous year. However, 46% of participants ‘disagree’ and ‘strongly disagree’, which suggests that almost half of participants still find compliance with tax obligations challenging. This may imply that taxpayers find SARS’ systems/processes too difficult to understand/navigate.
- Trust in SARS: In the last 12 months, 46% of participants said their trust in SARS had remained the same. This stagnation means SARS should continue its efforts to improve taxpayer trust. Doing this will eventually translate into restored public confidence, increased tax morality and ultimately the payment of tax, which our country sorely needs to fulfil our fiscal budget.
Devnarain says: “Our survey is more than just an annual exercise—it is a critical lens through which we assess whether SARS is living up to its promise of efficiency, transparency and trustworthiness. The feedback gathered from taxpayers serves as a vital barometer of SARS' performance, particularly in its efforts to modernise its systems, engage stakeholders and build public trust in the tax administration system.”
Click here to read more...
Get the latest issue of FAnews