Assessing the perceptions and experiences of taxpayers when dealing with SARS
South African taxpayers’ trust in the South African Revenue Service (SARS) has increased in 2022, according to PwC South Africa’s 2022 Taxing Times Survey. The survey was designed to not only measure corporate taxpayers’ recent experiences with SARS, but to also highlight key areas of success as well as areas for improvement at the organisation.
The tax landscape has considerably evolved since our Taxing Times report was initially released in 2018. Some noteworthy changes at SARS include its new leadership, the restructuring of the organisation, the allocation of resources in 2021 to re-capacitate SARS (including people and technology), and improvements in the tax enforcement realm.
Elle-Sarah Rossato, Tax Controversy & Dispute Resolution Partner at PwC South Africa, says: “We have seen SARS make some considerable shifts in an effort to meet its nine strategic objectives that are aligned to its new ‘Vision 2024’ — which is ‘to build a smart modern SARS, with unquestionable integrity, trusted and admired,’ as stated by the Commissioner of SARS. This has resulted in a considerable push to drive recruitment and ultimately increase the staff complement, as well as to improve technology platforms, i.e. making it easier to comply with taxpayers’ tax obligations. It has also resulted in SARS communicating better with stakeholders to assist in identifying areas of possible improvements.”
Additionally, SARS introduced several new units including the High Wealth Individual Taxpayer Segment and Illicit Economy Unit. The Large Business and International Tax division (LB&I) is also in a process of modernisation in order to improve service delivery to its large clients, as well as to focus on non-compliant taxpayers.
The survey in context
The survey, which is the fifth in the annual series, was based on the responses of 178 corporate taxpayers who were surveyed between May and July 2022. Participants were from 23 industries, including Financial Services (30%), Energy, Utilities & Mining (10%), ‘Other’ (10%), Retail & Consumer (8%) and Automotive (5%). The 2022 survey results have been analysed with SARS’ nine key strategic objectives in mind — which includes providing clarity and certainty for taxpayers and traders of their obligations; making it easy for taxpayers and traders to comply with their obligations; detecting taxpayers and traders who do not comply, and making non-compliance hard and costly; and developing a high-performing, diverse, agile, engaged and evolved workforce.
This year’s survey questions focussed on four key areas:
- The Audit Process: Corporate Income Tax; Value-Added Tax; and Transfer Pricing
- The Debt Management Process
- The Voluntary Disclosure Programme (VDP)
- SARS’ Service Delivery
Key highlights from the survey include:
- 45% of respondents say their trust in SARS has improved in the last 12 months. Where trust has improved, respondents indicate that this is due to media coverage of large investigations and fraud that is uncovered.
- Participants also indicate that there is a 47% likelihood of being selected for verification post submission of their tax returns. This is a 6% improvement from 2021.
- From a debt management perspective, 25% of participants indicate that SARS accepted their suspension of payment application pending the outcome of their disputes.This is a 9% improvement from 2021.
- The contentious issue of success with a request for reduced assessment was a 50%/50% split response from participants.
- While participants indicate that VAT verification (post submission of supporting documents) took mostly between three to six months to finalise, 22% (up from 9% in 2021) of them believe the payment of VAT refunds took within 21 days post finalisation of verification.
- 45% of participants are in agreement that it has become easier to comply with their tax obligations. This is a positive statement and aligns with one of SARS’ strategic objectives i.e. making it easier for taxpayers to comply with their tax obligations.
- 71% of participants say they do not believe SARS improved on delivering quality outcomes and performance excellence over the past 12 months.
- On how taxpayers feel about SARS sticking to timeframes, 78% disagree that the organisation complies with set time periods, and as a possible result, many taxpayers turn to their tax consultants or the Tax Ombud’s office for assistance in this regard.
- Finally on the VDP front, 55% of participants indicate that their VDP’s were rejected on the basis of it not being voluntary, with 78% stating that the underlying reason was that SARS believed the taxpayer was under audit. In the last financial year, the VDP contributed to more than R3 billion of revenue for SARS.
Jadyne Devnarain, Tax Controversy & Dispute Resolution Associate Director at PwC South Africa, says: “The survey outcomes serve a dual purpose. On one hand, it enables us to understand taxpayers’ pain points when dealing with SARS and constructively assist and support such taxpayers. On the other hand, it is an equally good platform to engage with SARS about how it can improve public trust, efficiency and confidence in the tax administration system, and improve its stakeholder relationships.”
SARS has increasingly taken a keen interest in the findings of our survey and welcomes engagement with the survey participants and taxpaying community at large on their experiences to actively find new, improved solutions. Following the release of our survey results, PwC intends to actively liaise with SARS on a regular basis to continue to assist them to understand taxpayer frustrations. This is another way in which we continue to work as a community of solvers to make a positive societal impact.
The survey aligns with PwC’s New Equation strategy which is about supporting organisations as they seek to build trust and create sustained outcomes — the holistic outcomes which deliver value, with tax often being the differentiator.
