Revenue Conference 2014 Fair and Efficient Revenue Collection

2 20 years of Tax and Customs Administration  2 nd Biggest Economy in Africa ( 25 th in the World)  25% unemployment  2% Growth outlook  Negative Balance of Trade  Credit Rating: BBB  Tax revenue to GDP: 26% Economic Overview

3 20 years of Tax and Customs Administration We are a Revenue Authority Tax and Customs administration in South Africa Staff Compliment 15, 000 2,597 Customs Officers 2,597 Customs Officers SEAAIRLAND/ROADRAIL  16 million individual taxpayers  2.7million companies  40k importers  245k exporters  3k clearing agents Volumes (2013) Number of Transactions/Declarations: 6 mil Transaction Value R2,6 trillion (USD 253,7)

4 20 years of Tax and Customs Administration SARS REVEUE COLLECTIONS On average Customs contributes about 20% of total SARS revenue collection

5 20 years of Tax and Customs Administration Elements of Customs Revenue The Customs Division is primarily responsible for collecting all trade-related revenue, however it is also collects other revenue such as environmental levies on imported incandescent light bulbs.

6 20 years of Tax and Customs Administration  Predictable and Transparent Customs Procedures  Consistent application of the law  Independent/effective appeal mechanisms  Ability to effectively address unfair practices (levelling the playing field)  Predictable and Transparent Customs Procedures  Consistent application of the law  Independent/effective appeal mechanisms  Ability to effectively address unfair practices (levelling the playing field) What do we understand by Fairness  Ease of doing business/ make it easy to comply  Removal of unnecessary impediments for legitimate trade  Doing more with less/ utilising limited resources in response to the ever increasing mandate  Ease of doing business/ make it easy to comply  Removal of unnecessary impediments for legitimate trade  Doing more with less/ utilising limited resources in response to the ever increasing mandate What do we understand Efficiency

7 20 years of Tax and Customs Administration To enhance fairness and efficiency the WCO calls for: WCO Revenue Package Areas of Focus Impact of SARS effort Trade Facilitation measures SARS’ accession to the RKC :  Implementation of customs clearance by procedure.  Implementation of simplified procedures. Enhanced Customs controls in valuation SARS is rebuilding this area as we have lost a number of personnel to the private sector. We are working with the WCO to assess our capability gap. Implemented a new integrated Customs processing system and tariff engine. Improved Classification capability Better control of benefits arising from preferential agreements Improved compliance and enforcement We have publicised a Compliance Programme Introduction of the Preferred Trader initiative - foundation for the AEO programme with Trade SARS efforts/ alignment 0%100%

8 20 years of Tax and Customs Administration The following Challenges continue to erode the revenue base resulting in revenue leakages:  Under-valuation  Under-declaration  Mis-declaration  Smuggling Challenges to Revenue Collection

9 20 years of Tax and Customs Administration Segmentation of the trade to allow for customised service and risk application Use of technology to enhance Customs Control Risk Management Simplification and Modernising Customs Law Customs System Overhaul Improvement SARS

Efficiency

11 20 years of Tax and Customs Administration  Settlement Committees  Compliance with the Promotion of Administrative Justice Act (PAJA) Governance structures - Fairness Portfolio Committee on Finance Service Monitoring Office Internal Audit Tax Ombud Ensuring fair treatment of public and taxpayers

Thank You !