The South African Revenue Service (Sars) says it uncovers non-compliance through data-driven risk detection.
THE South African Revenue Service (Sars) says it uncovers non-compliance and fraud through data-driven risk detection. According to the tax-collection agency, one of its strategic objectives is to work hard in expanding the use of data to improve the integrity of outcomes and enhance its capability to detect instances of non-compliance.
The organisation pointed to their government procurement of personal protective equipment analysis, which revealed that large numbers of vendors who supply services to the government are not tax compliant as progress of this strategy.
“We identified approximately 1,900 entities, each earning more than R1-million (between March 2020 – May 2021), from contracts with government, totalling R6.3 billion, yet are not registered as VAT vendors; a further 2380 VAT registered vendors have filed nil returns, despite having earned collectively over R9 billion from government contracts.”
Through data from whistle-blower reports and third-party sources, Sars deployed over 90 employees to execute one of their largest search and seizure operations. This operation identified 11 entities at four different sites and 27 taxpayers for potential fraudulent disclosures in respect of several years.
“The results from our Criminal Investigations efforts have yielded in excess of 70 convictions this year alone,” said Sars.
Sars Commissioner Edward Kieswetter said the agency still has a long way to go, but it is encouraged that the strategic approach is beginning to show early impact.
“Sars proceeds from the premise that most taxpayers are honest and want to fulfil their legal obligations. To these taxpayers, we will work hard to assist them by providing clarity and easing the burden of compliance.
”Those, however, who continue to defraud the tax system, must know that they do so at their own peril, as we make progress on the rebuilding and modernisation of the institution. As we observe Anti-Corruption Day, Sars remains committed to building on its capability to enforce the law and pursue those who wilfully or criminally seek to break it,” said Kieswetter.
The agency said it uses data from various domestic and international sources as input into machine learning models, risk profiling and case selection. “Several trends have already been observed with positive outcomes in a number of instances, some of which were previously reported,” said Sars.
According to Sars, this includes banks, retirement funds, medical insurance providers, the property deeds office, the companies register, the national register of motor vehicles, the National Treasury central supplier database, as well as the national population register.
International data sources include the automatic exchange of information on South Africans with offshore financial assets from about 100 foreign jurisdictions, as well as several mutual administrative agreements with sister organisations.
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