Tax collection in South Africa is moving into a new age, and suggestions are that it will become a lot more serious, with experts warning that the South African Revenue Service (SARS) is in the process of incorporating artificial intelligence, machine learning-driven collection methods.
This essentially means that the taxman has gained a very useful tool in its arsenal, and offers SARS the chance to properly cross-examine tax affairs, leaving little room for human error.
Tax Consulting SA have stated that SARS have made it known that there will be little room for error in regards to tax submissions, which could inevitably lead to rather expensive mistakes if the matter is not taken seriously.
According to SARS: “The Compliance Programme uses data, artificial intelligence and machine learning algorithms to successfully counter criminality and willful non-compliance.”
In an article on BusinessTech it states that SARS has officially caught up to non-compliant taxpayers, and this should be a point of concern for them, according to Tax Consulting SA.
A proper SARS audit can be very intimidating and the questions they ask will leave no stone unturned. This is not your general tax audit that occurs on a yearly basis, but rather an in-depth audit that will quickly uncover where sudden wealth with little to no explanation has come from, make no mistake that this kind of audit could significantly impact you.
“SARS has befriended Artificial Intelligence to do the heavy lifting,” the group is quoted as saying. An example of an in-depth audit letter was provided, where SARS had shown that they had a “deep degree of understanding” about the taxpayer’s financial affairs.
While these questions are very direct, they are also vague in nature, ensuring that the taxpayer has very little room for movement when it comes to covering up areas they would rather not have brought forward.
Some of these questions include:
- “Clarify your involvement with…”
- “Submit proof of sale for…”
- “Submit 12 months’ bank statement from all related accounts…”
- “Highlight all credit deposits with a description for all accounts”
- “Reconcile all your income … with your declaration made to SARS across all bank accounts”
- “List all your assets and liabilities ; Business and Private …”
“It is evident that SARS is using the cross-referencing of data to investigate taxpayers. The level of detail and sophistication showcased in the document necessitates a heightened standard of diligence,” BusinessTech quoted Tax Consulting as saying.
The group also warned that even compliant taxpayers can get caught up in the chase, even though SARS’ main purpose of the use of this technology is to apprehend tax dodgers and evaders. The use of this AI will mean that compliant and non-compliant taxpayers will come under the same level of scrutiny, as SARS looks to fulfill its mandate by collecting all taxes that are due.
With SARS taking a leap into the future, it is now more important than ever that taxpayers are diligent and proactive. With the emergence of AI being used to investigate means, there will be no margin for error when looking at discrepancies and inaccuracies. The group has gone on to say that “SARS’ enhanced capabilities demand meticulous record-keeping and adherence to regulations”.
It is important that all South African residents comply with laws laid out by SARS to ensure that they do not come under scrutiny and face repercussions. If you are unsure about taxes, or the laws of compliance, then you should educate yourself or seek a professional tax consultant.
According to SARS commissioner Edward Kieswetter the “use of AI and proactive measures have resulted in the recovery of R210-billion for the first 11 months of the current tax year.”
For those who may be concerned that they may not be fully compliant with SARS’ process there is some good news. It may take a little more time for SARS’ new AI system to be fully integrated but the clock is ticking.
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