SARS is now picking up on and searching for taxpayers who are not declaring income.
SARS has managed to make revenue collection more efficient in the the last couple of years. A large part of this efficiency can be attributed to the developments in AI. We are seeing more and more digitization of taxes in South Africa as well as SARS processes being overhauled as they progress further and further into the realm of AI. With continued efforts by SARS to improve efficiency in tax collection, this is sure to help keep potential tax rate increases at bay for now.
The improvements that SARS has been experiencing are a direct result of the investigative mechanisms they have put in place together with a major drive to upskill their staff. Data science and automation has helped SARS tremendously and has led to more convictions, and this is sure to be a major deterrent for non-compliance.
SARS has begun its crackdown on taxpayers that have unexplained wealth or income that has not been declared. SARS is making considerable effort to profile these individuals who are earning without being registered taxpayers. On discovery of these individuals, SARS is ensuring that these individuals are registered with SARS.
In 2022 SARS discovered approximately 26 000 Individuals who earned more than R1million and were not registered for tax.
The individual taxpayer base grew in 2022 by 1.5million individuals, adding approximately another R6 billion in tax revenue. However, there is still an erosion of the tax base, many companies are structuring in such a way, all to avoid paying tax by creating companies in countries like Mauritius. The issue is not the wealth you have legitimately built up but rather the wealth that cannot be explained. SARS is focusing on South Africans living abroad as well to determine whether there are inconsistencies in their accumulated wealth.
It will be a delicate process trying to improve compliance and collection without chasing away the tax base. We are sure living in interesting tax times.
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