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Speaker 1: The South African Revenue Services has crossed a major milestone,

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Speaker 1: collecting more than two trillion in net revenue for the

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Speaker 1: year twenty twenty five twenty twenty six, that firstcal year.

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Speaker 1: It's the highest figure recorded in the country's democratic history.

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Speaker 1: And it comes despice challenging economic backdrop, and it's been

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Speaker 1: very difficult for a number of people over the last

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Speaker 1: year or year and a half now, slow growth, global

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Speaker 1: disruptions and the rise of an illicit economy of all

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Speaker 1: added pressure. We've got the elicit economy in cigarettes, the

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Speaker 1: elicit economy in the liquor trade, and we've actually reached

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Speaker 1: a point whereby the official companies, the tobacco companies, so

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Speaker 1: sit listen, we're going to stop production in South Africa.

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Speaker 1: Yet SARS has not only met its target, has actually

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Speaker 1: exceeded them. A big part of that success lies in

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Speaker 1: a far more aggressive and targeted approach to compliance. The

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Speaker 1: message is clear, non compliance is becoming harder and far

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Speaker 1: more cost The partner and head of Strategic Engagement and Compliance,

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Speaker 1: and we chat to him this morning, Joshuin. By you, Joshua,

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Speaker 1: A very good morning to you and welcome to gave Talk.

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Speaker 2: Good morning to yourself and the listeners.

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Speaker 1: What are the key factors behind SARS surpassing that two

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Speaker 1: trillion revenue mark. It must have been the cherry on

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Speaker 1: the top for Edward key.

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Speaker 2: Swetter And look absolutely, I mean he's he's really going

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Speaker 2: out of the bank and to surpass that two trillion

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Speaker 2: revenue mark is an absolute milestone if you if you're

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Speaker 2: thinking key compliance drivers. While we've got the debt cash collections,

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Speaker 2: I mean with the last report that was sitting at

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Speaker 2: five hundred and eighteen billion in outstanding and not saying taxes.

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Speaker 2: So there's there's that element, and there's the compliance programs

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Speaker 2: that go hand and handle that. So from sars's kind

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Speaker 2: of separate targeted compliance programs, they brought in a whopping

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Speaker 2: three one hundred and sixteen billion that shows us a

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Speaker 2: year and year growth of twelve point four billion. Then

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Speaker 2: we've obviously got the prevention of any impermissible of fraudulent refunds,

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Speaker 2: specifically fact refunds, voluntary disclosure interventions and simply applying data

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Speaker 2: science and AI to identify and which you gain compliance

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Speaker 2: risks to safeguard the fiscus. But at the same time,

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Speaker 2: the AI VOLSU into SASS modernization three point zero. You know,

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Speaker 2: Vision twenty twenty four, et cetera. But it does not

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Speaker 2: come with zone problem without without its own.

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Speaker 1: Problems Jashuine Hello, oh yeah, and you know, employing AI

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Speaker 1: has definitely been a key driver in getting to a

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Speaker 1: point whereby you know, revenue collection and debt collection has

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Speaker 1: been able to make it easier for SARS officers to

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Speaker 1: see who are defaulting and who's not defaulting.

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Speaker 2: Look absolutely so SAWS have been very clear that they

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Speaker 2: have and will take full advantage of all technological advancements,

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Speaker 2: including AI, data science and any machine learning algorithms to

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Speaker 2: counter criminality in non compliance, especially in the listed economy.

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Speaker 2: As you mentioned, and when it comes to AI. While

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Speaker 2: one thing is clear, so SAWS obviously embarked on Project

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Speaker 2: AMMA billions last year and there was this massive recruitment drive.

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Speaker 2: We saw fifteen to seventeen hundred new resources coming in.

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Speaker 2: But tying that in with AI, this also means that

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Speaker 2: the utilization of the data driven insights serve to inform

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Speaker 2: SAWS of all transactional records pertaining to specific taxpayers and

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Speaker 2: using the AI, while the man hours and concombatantly, the

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Speaker 2: room for error is significantly reduced, So you've got increased

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Speaker 2: manpower but a reduced need for man hours per detection

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Speaker 2: of non compliance, meaning that you can detect far more

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Speaker 2: non compliance, casting your net far wider in a far

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Speaker 2: shorter period of time, with far more precision than was

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Speaker 2: historically possible.

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Speaker 1: How significant is then the role of targeted compliance programs

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Speaker 1: in boosting collections. I was reading something on Facebook and

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Speaker 1: this person was complaining and saying, oh, I woke up

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Speaker 1: this morning, was five thousand rand gone out of my account?

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Speaker 1: And somebody said, no, it's probably SARS that is collecting

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Speaker 1: their money. And this person says, how can this happen?

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Speaker 1: I'm going to go and reverse it at the bank. No,

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Speaker 1: you can't reverse it at the bank. SARS knows exactly

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Speaker 1: where you are, and they've taken that man, and it's

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Speaker 1: happened to a number of people. So that targeted compliance

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Speaker 1: program has been paying off.

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Speaker 2: You are correct. So when we speak to the targeted

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Speaker 2: compliance program, we're speaking to sars' stigmentation model by different

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Speaker 2: categories of taxpayers. And as an example, most recently, social

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Speaker 2: influencers in the gig economy prior to that, crypto revenue

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Speaker 2: augmentation units prior to that high wealth individuals. You know,

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Speaker 2: these segmentation units have different compliance strategies employed to target

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Speaker 2: different types of taxpayers. It's going to be what works

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Speaker 2: for that taxpayer segment. Now when it comes to the

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Speaker 2: bank accounts, while that's more of a blanket approach because

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Speaker 2: in terms of the tax administration, saws are empowered to

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Speaker 2: reach into your bank account and take out whatever is

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Speaker 2: due to them on the assumption you have sufficient funds

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Speaker 2: in your bank account for that. But they're empowered to

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Speaker 2: do so, and procedurally, if they issue you with a

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Speaker 2: letter of final demand, a third party appointment is one

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Speaker 2: of the sanctions listed on that letter of final demand

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Speaker 2: should you not respond within ten business days. Suitable responses

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Speaker 2: are one obviously pay your taxes. Two a suspension of

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Speaker 2: payment if you intend to dispute, and with the new

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Speaker 2: law changes, if you intend to reduce a to request

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Speaker 2: a reduced assessment as well, and if you enter into

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Speaker 2: a compromise of tax debts or partial rite off or

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Speaker 2: a payment arrangement, et cetera. But if you just don't respond,

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Speaker 2: then your bank account is next same way, seals can

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Speaker 2: go to court with a written statement and take judgment

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Speaker 2: against you. It's not formal legal proceedings. So the same

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Speaker 2: way salts can impose personal liability against directors of companies,

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Speaker 2: it's not going to court running through this process that's

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Speaker 2: months or if you're not years, it isn't notice because

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Speaker 2: they are empowered in terms of the tax legislation.

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Speaker 1: Chatting this morning to Joshuin by your tax Consulting SA,

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Speaker 1: and we are chatting about the two chillion rand in

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Speaker 1: terms of SALCE revenue collection and for the financial year

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Speaker 1: twenty twenty five and twenty twenty six is get but

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Speaker 1: kiss vetter steps down. We have a new sales commissioner

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Speaker 1: on the first of May. And yeah, as Joshuan was saying, hey,

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Speaker 1: your taxes, make the arrangement. Speak to saras be proactive

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Speaker 1: about it. Don't wait for a non compliance to be

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Speaker 1: issued to you. SARS is sending a strong message Jashuan

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Speaker 1: about non compliance and what does that hard and costly

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Speaker 1: actually look like for taxpayers.

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Speaker 2: Well, one example is we've seen a number of audits

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Speaker 2: and audits naturally I mean lots of simper by SASS

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Speaker 2: access to this data. So where we're at now is

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Speaker 2: in the course of an audit. While firstly is there

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Speaker 2: risk detected? How is that risk detected? Usually SARS would

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Speaker 2: have processed your bank statements because they have open access

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Speaker 2: to that information. It's simply requested from the bank. There's

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Speaker 2: not a match exchange of information build one hundred and

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Speaker 2: twenty other countries. And while hard in costly, hard and

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Speaker 2: costly can look like two hundred percent penalties imposed on

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Speaker 2: understatement of tax where SAWS deemed the behavior to be

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Speaker 2: intentional tax evasion and a repeat incident. There's an entire

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Speaker 2: behavioral penalty table. Let's obviously not forget interest and the

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Speaker 2: laundry list of criminal offenses, including not submitting a tax return.

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Speaker 1: What should individuals and businesses be doing right now? Not

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Speaker 1: to sort of be on the wrong side of SARS

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Speaker 1: and to stay on the right side of the revenue collection.

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Speaker 2: Look. I think it's it's very simple. File your tax

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Speaker 2: returns on time. You know, provisional taxes, your income tax.

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Speaker 2: Ensure you're for businesses, Ensure your annual financials are complete

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Speaker 2: and accurate and align with your bank statements and the

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Speaker 2: supporting documents and your and your and your income tax return.

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Speaker 2: Don't don't do anything weird with that. You know, have

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Speaker 2: your invoices available should SARS need it, and when a

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Speaker 2: liability arises, pay it. If you can't afford to pay it,

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Speaker 2: enter into a payment arrangement or some sort of compromise

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Speaker 2: of tax debt to write off interest and penalties and

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Speaker 2: just work a plan on the capital with SARS. They

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Speaker 2: are amicable to it because it's still falls into the

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Speaker 2: tenets of voluntary compliance.

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Speaker 1: The segmentation part of the conversation this morning in terms

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Speaker 1: of exactly you know, social influences and a lot of

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Speaker 1: people work in the social media space. Has there been

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Speaker 1: any clear direction in terms of that from SARS.

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Speaker 2: Yeah, so so SAS issues some some clear direction, more

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Speaker 2: so in the form of a media statement. But but

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Speaker 2: in short, general tax rules apply, meaning that brand endorsements, sponsorships,

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Speaker 2: certain types of gifts, et cetera. You know, they are

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Speaker 2: basically remuneration in trained rather than in cash. So almost

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Speaker 2: if you are thinking of a CTC like a total package,

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Speaker 2: it will still fall under remuneration and Father's guidances, guys,

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Speaker 2: it's still going to be teatured as gross income. So

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Speaker 2: even though you don't have the cash value, you've got

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Speaker 2: the benefit of it. Therefore, the cash value is what

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Speaker 2: is deemed to be the taxable benefit value.

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Speaker 1: Chatting this morning to Joshuan Byo Tax Consulting Essay, and

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Speaker 1: we here's the partner and head of Strategic Engagement and

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Speaker 1: Compliance at Tax Consulting Essay. It is very difficult for people,

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Speaker 1: you know, sometimes to negotiate and to navigate around what

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Speaker 1: is sort of tax deductible, is not tax deductible? What

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Speaker 1: should I be charging for? And I think, Joshuan, the

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Speaker 1: big thing in the big conversation during the COVID period

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Speaker 1: was can I actually deduct them with the space the

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Speaker 1: twenty five percent of a room that I'm working in?

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Speaker 1: Can I deduct that? And I know that in my

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Speaker 1: conversations with Edward Keyswetter, he said, look, be very careful

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Speaker 1: about that, Be very careful when you want to do that.

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Speaker 1: So when should a tax payer then consider actually bringing

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Speaker 1: in a professional person an a team to help him

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Speaker 1: with these taxes?

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Speaker 2: Look, so it's it obviously depends on the complexity of

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Speaker 2: your tax affairs, you know, and I mean to two

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Speaker 2: commission at keys versus point your the home office expense

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Speaker 2: it is such a big thing during COVID. But but

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Speaker 2: the admin that goes into that and the supporting documents

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Speaker 2: and keep your bills and demarket areas on your blueprints

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Speaker 2: for your house. And it's just an absolute admin nightmare.

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Speaker 2: But but from from a perspective, well, when should you

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Speaker 2: bring in the experts? The attorney in me wants to say, well,

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Speaker 2: whenever there's a risk or there's some legal exposure. But

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Speaker 2: but but more logically, it really is the case of

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Speaker 2: where your your tax affairs or way completing a tax

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Speaker 2: return makes you uncomfortable, that is when you should consider

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Speaker 2: bringing in professional help. If it's just a tax return,

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Speaker 2: great straightforward. As a business, you know, from an accounting perspective,

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Speaker 2: usually as soon as you you would cross that that

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Speaker 2: registration threshold that's now obviously increased, you would you would

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Speaker 2: want an accountant there to actually keep tracking, do your

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Speaker 2: battery cones and file youre that two or one, so

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Speaker 2: on and so forth. But as a rule of thumb,

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Speaker 2: any and all correspondence received from SAWS, and we're not

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Speaker 2: talking in assessments, We're saying no letters of final demand,

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Speaker 2: requests for relevant material, notice of ordered, et cetera. Any

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Speaker 2: correspondence received from US must be properly and timelessly addressed

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Speaker 2: and in the moment you get that, you go and

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Speaker 2: you enlist that a team, because that's usually when things

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Speaker 2: are about to get a little hairy.

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Speaker 1: Joshuan, by you chatting to us this morning, Tax Consulting

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Speaker 1: SA and chatting about the two trillion RAN that SARS

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Speaker 1: has collected and of course that revenue collecting, unpacking the

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Speaker 1: tax compliance crack down, the growing role of AI in

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Speaker 1: tax enforcement and what it means for taxpayers in South Africa. Joshuan,

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Speaker 1: thank you so much for your time this morning,