Presentation to the Standing Committee on Finance
01 July 2014
2014/15-2018/19 STRATEGIC PLAN & 2014/15 ANNUAL PERFORMANCE PLAN
Agenda
• SARS Mandate
• Highlights of SARS business
• SARS Strategy
• Strategic outcomes
2
SARS mandate
• Collect all revenue
• Ensure compliance with tax and customs law
• Customs service – revenue, manage borders and trade
• Advise Minister of Finance
• Advise Minister of Trade and Industry
3
Core outcomes of SARS strategy
4
Compliance is at the core of SARS strategy
• The Compliance Strategy seeks to:
– encourage voluntary compliance
– establish an uncomplicated system that deals fairly with those in it and minimises leakages
– increase its focus on bringing those outside the system into it
5
Compliance levers
• Education
– Taxpayers that are aware of their rights and obligations are more likely to comply
• Service
– Providing a professional, fair and efficient service promotes compliance
• Enforcement
– Credible enforcement promotes fairness and deters non-compliance with tax laws
6
Levers in action
• Differentiate among sectors of the taxpayers
• Breadth, depth and leverage
• Collaboration with other government institutions
• Ensure integrity of SARS systems and people
7
Revenue
Segment Mgt.
Channel Mgt.
Enforcement Service
Tax & Customs Compliance
Education
People Capability
Strategy map for SARS core strategy
8
Compliance challenges in the medium term
• Trends have shown improving compliance levels
• Slower economic growth will place pressure on the projected revenue collection
• Global trends of tax base erosion and profit shifting through aggressive avoidance and evasion schemes
• Growing illicit economy – e.g. cigarette smuggling
• Growing disquiet about government spending
9
Therefore
• Maintain and improve public trust in SARS
• Maintain and improve compliance levels
• Respond to non-compliance early
• Increase capability to interdict illicit trade
• Combat unacceptable avoidance
• Enhance collaboration with other government institutions
10
SARS business at a glance
1. Education 2. Service 3. Enforcement
Education Registration
Licensing Deregistration
Filing Declaration
Payment
Dispute Management
Receivable Management
Audit & Investigations
Judicial Process
Co
re p
roce
ss
Legislation & mandate
Education & Outreach 2013/14
Education
campaigns 4
Campaigns
to
Employers 2 096
Employees 2 144
Campaigns
through
Co-locations 1 441
MTU's 647
Points of
service 5 720
Interventions
at
Schools 234
Branches 574
Visited Institution/
organisation 3 516
Footprint:
• Branches 51
• Mobile Tax Unit 9
• Ports of entry 34
Capability to handle 4 channels (electronic, telephonic, postal and walk-ins)
Pieces of legislation - 22
Total Register – 25 mil (20.3 mil active)
• Individuals (active): 17 mil
• Companies (active): 3 mil
• Trusts (active): 0.3 mil
Number of filing transactions – 25 mil
Queries addressed – 10 mil
Tax entities audited (compliance audits) – 1.8 mil
Revenue collected – approximately R900 bn.
Number of visitors to branch offices – 6.38 mil (2012/13)
Operating expenses – 0.97% of revenue collected
Headcount – 14 137 (2013/14)
MTU served approx 720,000 people
In-depth audits 19568
Investigations concluded 333
Court cases supported 267
11
12
2014/15 2015/16 2016/17
Revenue 993 650 1 095 100 1 208 720
Nominal growth % 10.4% 10.2% 10.4%
Source: 2014 Budget
SARS Budget 9,440 9,899 10,509
Increases Y-o-Y -1% 5% 6%
Expected Inflation (MTEF) 5.6% 5.5% 5%
Over the medium term, SARS must collect…
13
Over the medium term, funds SARS will receive…
8238 757
8832 010
9457 969
10133 459 9534 393 9440 321
9898 708
10508 911
-
2000 000
4000 000
6000 000
8000 000
10000 000
12000 000
2013-14 2014-15 2015-16 2016-17
Ran
d V
alu
e R
'000
Year
Projected Cost ENE Allocation
Revenue composition 2013/14
Marginal tax rate
1994/95 1995/96 2010/11 2011/12 2012/13
PIT % 43% 45% 40% 40% 40%
CIT % 40% 35% 28% 28% 28%
14
310.9 , 35%
179.5 , 20%
237.8 , 26%
44.1 , 5%
127.6 , 14%
Personal Income Tax
Companies Income Tax
Value Added Tax
Customs duties
Other taxes
Revenue growth 1994-2014
15
97.4
186.0
404.6
662.8 723.8
16.4
34.3
90.9
151.1
176.0
113.8
220.3
495.5
813.8
899.8
-
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
900.0
1 000.0
1994/95… ...2000/01… ...2006/07 2012/13 2013/14
Tax Customs
11.5%
Priorities…
• Enhance technical capability of staff
• Single registration of taxpayers across government
• Implement Customs Bills and WTO trade facilitation
• Refined approach to taxpayer segments (e.g small business)
• Regulation of intermediaries
• Improved management of complaints
• International exchange of taxpayer information
• Border management
16
Thank You!
17