Covid-19: Being in uncharted waters does not mean you proceed without a plan, says SARS commissioner

The Commissioner of the South African Revenue Services (SARS), Edward Kieswetter discussed the organisation’s response to the Covid-19 challenges today (May 5), including working arrangements, revenue management and the Personal Income Tax Filing Season 2020/21. According to Kieswetter, the world, South Africa and specifically SARS is facing unprecedented challenges.

“Being in uncharted waters does not mean that you proceed without a plan. It simply means that you proceed with utmost caution, you use the best evidence available, and you remain open to new information and most importantly demonstrate genuine humility, an eagerness to learn, and the agility to adapt your approach as the situation evolves.”

He said more than ever government needs tax revenue to provide much-needed relief to businesses and individuals, and especially to keep an army of community health workers, and other medical and frontline workers employed – the current economic environment is already constrained as it is.

ALSO READ: Covid-19: World leaders pledge €7.4-billion to fight virus

At the same time, many businesses and individuals are desperately in need of refunds; customs officials have had to ensure that the essential and legitimate PPE, medical equipment and supplies as well as other permitted cargo can be lawfully moved through the ports of entry and to prepare core administration systems to administer all the tax relief measures announced by government.

During this time, it also remains important for all taxpayers to remain compliant. “Covid-19 has meant that we review the way we work,” said Kieswetter, adding that as part of its VISION 2024 SARS has committed to build a “smart modern SARS with unquestionable integrity, trusted and admired”.

The technology and data management teams have added 30 additional functionalities to digital offering including:

* Automated registration for Personal Income Tax – almost 6000 registrations have taken place.
* Notice of Registration for VAT now available on e-filing, allowing VAT vendors to view, print or save their Notice of Registration – almost 5000 have already been facilitated.
* Taxpayers may use the enhanced e-filing system to: check their compliance status; review their registration details; complete proof of registration and obtain a statement of account, both individuals and businesses.

* Non-filers can now submit supporting documents via the web – over 1200 submissions to date.
* Suspended the need for VAT interviews as a pre-registration requirement to post registration – almost 3000 taxpayers have taken this up.
* Developed a streamlined banking details verification process by using enhanced data matching and artificial intelligence based verification – 14800 already completed
* Enhanced the process for on-line tax directives where individual taxpayers or their practitioners may apply via e-filing.
* Integrated the email system to allow taxpayers to send queries via email – this has allowed staff working from home to resolve taxpayer queries – almost 5000 have already been resolved.
* Introduced an online appointment system for those taxpayers and tax practitioners who remain insistent or unable to convert to digital offerings.
* Enhanced website with enabling information and FAQs to assist taxpayers, traders and practitioners, of which there were 1,34 million hits, with 80,000 of those Covid-19 related.

In response to the lockdown SARS modified working arrangements. It stepped up regular communications to employees, engaged the leadership of organised labour to create clarity and empower them to understand the new workplace arrangements and allowed employees to work from home.

Also, as the government announced a number of Tax Relief Measures, core administrative systems had to be prepared to ensure seamless implementation across the organisation.

SARS also received requests from other government departments for assistance to leverage its data matching capabilities, especially in support of improving the integrity of the various relief disbursements

In terms of trade facilitation during lockdown, a number of measures were put in place to facilitate permissible trade whilst adhering to the safety protocols to protect frontline customs officers. Some of these measures included sanitisation of work areas and PPEs for frontline staff.

Interaction with intergovernmental agencies was also stepped up to facilitate the movement of cargo to avoid congestion at ports of entry and to ensure efficient movement of goods to and from neighboring states.

SARS has also observed ongoing illicit trade activities and have effected a number of detentions and seizures during April:

* 43 detentions (cigarettes to masks).
* 17 seizures to the value of R2.6 million mainly cigarettes, alcohol and counterfeit clothing and footwear.

According the the commissioner, Tax & Customs Revenue performance was significantly affected with the general state of the South African economy heading into the Covid-19 challenge but aggravated by the investment downgrades by two ratings agencies.

This also included the impact of Covid-19 Tax Relief Measures and decisions made by government during the various lockdown levels that will have a direct impact on economic capacity as well as economic activities.

Although early days, the initial view is that revenue performance will be lower than the February Budget announcement by between 15%-20%. This means that revenue under-recovery could move up to R285 billion.

Also, the cost of Covid-19 Tax Relief Measures alone is estimated at R70 billion arising from tax deferrals without penalties and interests, Employee Tax Incentive extensions as well as the temporary suspension of the Skills Development Levy.

According to Kieswetter, a major concern from a revenue perspective is not only a downward trend of economic activities, but a loss of economic capacity due to businesses closing and job losses. The full impact of this will manifest over the next few months, and will also depend on how government manages the phasing in of economic activities.

Many businesses will not be able to operate profitably at reduced capacity and will fail completely. Those who have started businesses from scratch, will know how hard it is to start a business. The loss of economic capacity in the economy will have long-term tax revenue implications.

The Filing Season 2020 for Personal Taxes has been designed with a number of key changes.

Phase 1: April 15 to May 31 – compliance by employers in respect of payroll taxes (PAYE) is very important as well as providers of Third Party Information, for example, banks, medical savings and insurance schemes.

Phase 2: June 1 to August 31 – during this period taxpayers are requested to engage with SARS to ensure that their tax files are up to date. SARS on-line facilities are available to do most of this.

All outstanding third party information will also be followed up during this period to ensure the highest level of data integrity. Third party data providers, including employers, who remain non-compliant will be charged criminally during this period.

Phase 3: September 1 to January 31, 2021 will focus on employee filing. Individuals who are required to file will be reminded.

HAVE YOUR SAY

Like the South Coast Herald’s Facebook page, follow us on Twitter and Instagram