Presentation on theme: "1 Basic Building Blocks of SARS Domestic Resource Mobilisation Aidan Keanly South African Revenue Service."— Presentation transcript:
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 Every country is very different Understand YOUR particular environment Understand YOUR particular environment Customise by looking at three basic questions Customise by looking at three basic questions What’s NEW? What’s NEW? What’s the TRUTH? What’s the TRUTH? What’s the RIGHT thing to do? What’s the RIGHT thing to do?
3 SA TAXBASE ECONOMIC ENVIRONMENT GOVT. TAX POLICY LEGISLATION GOVT. POLICY IMPACT Performance Process Competency Facilities & Layout Organisation ApplicationEquipment Delivery Vehicle Culture Strategy SARS Integration Blueprint WARNING – DO NOT GO HERE!!!!
4 Performance The arrangement of tasks / activities within the organisation Process Staff Facilities & Layout Organisation The key elements and structure of the organisation All competencies related to the process in terms of knowledge, skills, professional qualities All facilities to support Architecture I.e. buildings, layout, size, capability, requirements, standards, supply services I.e. water The software required to satisfy business needs ApplicationEquipment All equipment needed for architecture The hardware and software required by the chosen applications Delivery Vehicle Culture Group behaviors needed to work in the future I.e norms, values, group behavior Clear picture of: SARS role in SA What need to be achieved Changing need of stakeholders Services and methods of reaching taxpayers Strategy Achieving target measures on key strategic and operational dimensions Definitions 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
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 SARS COMPLIANCE MODELEnforcement Service Education Environmental Knowledge and Understanding Effective Segmentation Risk Assessment Customer Awareness Focus on making compliance easier for taxpayers by improving service and reducing the administrative burden. Deter and catch non-compliant taxpayers. Credible, legitimate and firm enforcement, with appropriate sanctions, will discourage tax evasion. 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.
8 VOLUNTARY COMPLIANCE BASED ON 8 Key to this approach is to ensure that taxpayers/traders understand obligations make it as easy as possible for those trying to comply for those trying to comply make it very hard for those trying to avoid paying their fair share 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 9 SpecialIndividualsBusinesses and SOEIntermediaries SEGMENT TAX BASE DUE TO ECONOMIC DISPARITY Traders (Trade inter- mediaries) Tax practitioners Employer as agent Standard Complex SITE and below threshold Formal business Large Informal business Government NGOs & PBOs 9
10 SARS ADOPTED A LEADERSHIP MODEL BASED ON KEY BEHAVIOURAL COMPETENCIES 10 Higher Purpose & Integrity Higher Purpose & Integrity Championing the Mandate Responsibility Social Impact Empowering Delivery Driving Excellence Mobilising Teams Transformation Developing others Building Sustainability Leveraging Diversity Influencing Others Insight Conceptual Thinking Accurate Understanding Humility Source Hay Group
11 POLICY STEPS TO ADDRESS TAX GAP International Tax Amnesty International Tax Amnesty Small Business Amnesty Small Business Amnesty Legislative amendments Legislative amendments Residents worldwide income 3 rd 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 Exponential increase in e-channels Improved refund methodology and turnaround times Improved refund methodology and turnaround times Systematised deferment & agreements to assist taxpayers Systematised deferment & agreements to assist taxpayers Widening of tax net through Risk Management via 3 rd party validations Widening of tax net through Risk Management via 3 rd party validations Better collections from Medium and Small companies Better collections from Medium and Small companies Containment of suspicious VAT refunds & prosecution Containment of suspicious VAT refunds & prosecution Significant improvement in provisional payments of individuals Significant improvement in provisional payments of individuals