Despite the belief that SARS may specifically target taxpayers to reveal non-compliant behaviour, they have recently confirmed that their means to determine who is selected for verification is done purely through their risk algorithm.
SARS commissioner Edward Kieswetter has shared that selection is based on risk markers and non-compliance potential, emphasizing that the entity size of the taxpayer is not a factor. The commissioner also highlighted that more than two-thirds of individuals selected by the risk engine had shown signs of previously repeated non-compliance.
The overall consensus on the tax submission process was positive. However, there were still several pitfalls experienced by various taxpayers – including those selected for verification to confirm compliance.
The South African Institute of Chartered Accountants (SAICA) highlighted that taxpayers, and small businesses, in particular, were experiencing frustration when attempting to complete their VAT returns, pointing to blatant system flaws. This criticism has been echoed amongst various industry figures, bringing further scrutiny to the methods used and entities SARS has targeted, shedding light on the argument that smaller entities are the easier targets in these processes.
To prevent taxpayer’s unease and complaints in the coming financial year, SARS will aim to improve public trust and confidence in the system as they navigate their new approach to tackling non-compliance. Despite the weaknesses of the past financial year, SARS has improved its performance and continues to do so.
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