Covid-19 pandemic spurs Sars' modernisation programme

17th September 2021 By: Schalk Burger - Creamer Media Senior Deputy Editor

The Covid-19 pandemic's impact on the South African Revenue Service (Sars) compressed a decade-long modernisation programme into two to three years, Sars commissioner Edward Kieswetter noted on September 16.

"The pandemic struck as we were starting our journey of rebuilding Sars and reigniting the modernisation programme. Because we had strategic clarity, instead of slowing down, it accelerated the transformation," he told delegates participating in a South African Association of Freight Forwarders’ conference.

"After a pedestrian few years, we have intensified our commitment to place the taxpayer and trader at the centre of our modernisation programme. On the customs front, we have always sought to achieve the fine balance between service and enforcement to fulfil our mandate to collect tax and our duty to facilitate legitimate trade."

The Covid-19 pandemic heightened the need for South Africa to maintain the efficient passage of goods and services through ports of entry and to detect and respond to the scourge of illicit and criminal imports and exports.

"Leveraging technology and data is central to our success and indispensable to aid trade facilitation and target only high-risk moments for further scrutiny."

Artificial intelligence and machine learning algorithms will allow Sars to provide a “green lane” experience for those authorised or preferred operators.

Further, data-driven insights provide Sars with greater visibility, while also improving integrity, as it moves towards a sector- and customer-specific risk profiling and case selection process.

The role of customs administrations and partnerships with the freight industry were central to the successful establishment of resilient, sustainable supply chains, and the efficiency and the overall recovery of this sector of the economy was significant and should not be underestimated, Kieswetter added.

Sars' strategic intent is based on a system of voluntary compliance, which means it has a collective interest with stakeholders to improve the integrity of the ecosystem. It aims to build effective partnerships underpinned by voluntary compliance.

"We will also step up our work with private sector partners to ensure modernisation initiatives are informed by and geared towards addressing blockages and open the trade supply chain in areas where stakeholders currently experience negative impacts."

Meanwhile, Sars had over the past two decades invested in automating customs and trade interactions and, through that, increased its trade facility offerings. Turnaround times that used to be measured in days and require manual processes at customs offices had changed, and today traders could expect a response in seconds, said Sars Customs director Beyers Theron.

Globally, customs and trade organisations are in challenging times, as they were created for a different operating environment and this challenge requires innovative thinking to adapt to a new normal.

The pandemic's impact on trade and the world supply chains led to disruptions, including at a local level. Covid-19 forced an acceleration in the use of technology and, in the past 18 to 24 months, there had been a boom in e-commerce, which would have a major impact on cross-border trade, he said.

"In Sars, the reality of the changing operating environment forced us to adapt and expedite our Sars vision of building a smart, modern Sars of unquestionable integrity that is trusted and admired," Theron said.

The key outcomes for Sars Customs aligns with Sars' mandate to facilitate legitimate trade, collect revenue and drive compliance.

"Connectivity is arguably the common thread between these three elements, as it enables effective balancing between making it easy for stakeholders to comply and detecting noncompliance," he said.

The revenue service was making good progress towards modernisation, with a fully automated risk engine that leveraged third-party data and which was equipped with features on par with most modern customs risk systems, he noted.

Further, Sars' clearance processing system provided fully automated transacting and aligned with international standards and was linked to its front-end workflow and integrated with its inspections processes. Its cargo reporting system was fully automated and supported cargo transacting throughout the supply chain from preloading to discharge, said Theron.

The revenue service has deployed similar technology-enabled automated capabilities for goods accounting and declarations, as well as payments and refunds, and it is connected to several customs administrations worldwide, and is in talks with others to secure agreements to exchange information automatically.

"The vision is to create an environment in which compliant and honest traders can move goods and services non-stop through borders where drivers do not need to exit the vehicle, and with all required information about the cargo, drivers, passports and permits automatically shared with requisite authorities along the vehicle's route.

"This vision can be a reality, and on September 1, we took a first step to enable this type of trade environment when we enable vehicle number plate recognition on arrival and exit managed processes," Theron said.

"We are in the first phase of implementation of smart borders and full implementation will evolve into non-stop flow for compliant traders, while providing 100% screening through the use of inline scanners to detect noncompliance," he said.