1. Basic Building Blocks of SARS Domestic Resource Mobilisation Aidan Keanly South African Revenue Service

2. THE FIRST STEPS…… Remember….. Every country is very different
Understand YOUR particular environment
Customise by looking at three basic questions
What’s NEW?
What’s the TRUTH?
What’s the RIGHT thing to do?

3. SARS Integration Blueprint
WARNING – DO NOT GO HERE!!!!
ECONOMIC ENVIRONMENT
Performance
Process
Competency
Facilities &
Layout
Organisation
Application
Equipment
Delivery Vehicle
Culture
Strategy
SARS Integration Blueprint
GOVT. TAX POLICY
GOVT. POLICY
IMPACT
LEGISLATION
SA TAXBASE

4. Definitions Culture Strategy Performance Organisation Staff
To define how people, process and technology will interact and create a Business Case and implementation plan to show when and how targeted value can be obtained
Definitions
Culture
Group behaviors needed to work in the future I.e norms, values, group behavior
Strategy
Performance
Organisation
Staff
The key elements and structure of the organisation
Facilities &
Layout
All competencies related to the process in terms of knowledge, skills, professional qualities
Clear picture of:
SARS role in SA
What need to be achieved
Changing need of stakeholders
Services and methods of reaching taxpayers
Achieving target measures on key strategic and operational dimensions
All facilities to support Architecture
I.e. buildings, layout, size, capability, requirements, standards, supply services I.e. water
Process
The arrangement of tasks / activities within the organisation
Application
Equipment
The software required to satisfy business needs
All equipment needed for architecture
Delivery Vehicle
The hardware and software required by the chosen applications

5. BUILDING BLOCKS OF SARS DMR
Political will, support and air-cover
Required legal framework
Functioning institution (process not products)
Know your market and segment
Involve all stakeholders
Change management
Manage donor support and advice
Measurement of success

6. TAX GAP IN SOUTH AFRICA Tax Gap in South Africa between 15% and 30%
Capital flight (unrecorded and untaxed illicit leakage of capital and resources) estimated at 6.6% of GDP
Approach by SARS to address leakages;
Policy reform and International collaboration
Enhancement of administrative efficiencies to optimize compliance of formal economy taxpayers
Education and outreach to informal economy
Risk Management

7. Environmental Knowledge and Understanding Effective Segmentation
SARS COMPLIANCE MODEL
Deter and catch non-compliant taxpayers. Credible, legitimate and firm enforcement, with appropriate sanctions, will discourage tax evasion.
Focus on making compliance easier for taxpayers by improving service and reducing the administrative burden.
Risk Assessment
Service
Enforcement
Environmental Knowledge and Understanding
Effective Segmentation
Customer Awareness
Broadening tax base by educating the public about their tax obligations. It’s recognised that there is a low awareness of responsibilities of fiscal citizenship.
Education

8. VOLUNTARY COMPLIANCE BASED ON
Key to this approach is to ensure that taxpayers/traders understand obligations
make it as easy as possible
for those trying to comply
make it very hard for those
trying to avoid paying their fair share
improve service
improve enforcement
Some taxpayers/traders will always try to comply whether effective enforcement exists or not - people who believe in doing the right thing
some taxpayers/traders will not comply whether effective enforcement exists or not – the criminals
The goal of voluntary compliance is to influence the undecided majority who will choose one way or the other based upon how well we implement this strategy

9. SEGMENT TAX BASE DUE TO ECONOMIC DISPARITY
Special
Individuals
Businesses and SOE
Intermediaries
Tax practitioners
Complex
Large
Government NGOs &
PBOs 1 3 6 9
Traders (Trade inter- mediaries)
Standard
Formal
business 2 4 7
Informal
business
Employer as agent
SITE and below threshold 10 5 8 9
JOH-RNS AB-P1 9

10. SARS ADOPTED A LEADERSHIP MODEL BASED ON KEY BEHAVIOURAL COMPETENCIES
Higher
Purpose &
Integrity
Transformation
Empowering
Delivery
Insight
Higher Purpose & Integrity
Championing the Mandate
Responsibility Social Impact
Empowering Delivery
Driving Excellence
Mobilising Teams
Developing others
Building Sustainability
Leveraging Diversity
Influencing Others
Conceptual Thinking
Accurate Understanding
Humility
Source Hay Group

11. POLICY STEPS TO ADDRESS TAX GAP
International Tax Amnesty
Small Business Amnesty
Legislative amendments
Residents worldwide income
3rd Party data requirements
Scheduling of provisional payments
Increased obligations on employers
Penalty regime
Voluntary Disclosure

12. SUMMARY AND CONCLUSION
Compliance drives sustained SARS when GFC kicked in
Exponential increase in e-channels
Improved refund methodology and turnaround times
Systematised deferment & agreements to assist taxpayers
Widening of tax net through Risk Management via 3rd party validations
Better collections from Medium and Small companies
Containment of suspicious VAT refunds & prosecution
Significant improvement in provisional payments of individuals