An increasing number of South African taxpayers believe the quality of service delivered by the South African Revenue Service (Sars) is improving, professional services firm PwC’s newly released ‘Taxing Times Survey 2023’ shows, with a combined 53% of respondents having said they ‘agree’ and ‘strongly agree’ that Sars provided quality service (a 14% improvement from last year).
This is the sixth yearly instalment of the survey, which was conducted between May and July.
One-hundred-and-eighty-two corporate taxpayers from 16 industries including financial services; retail and consumer; agriculture; industrial manufacturing; and energy, utilities and mining, participated in the survey.
The goal of the survey is to assess corporate taxpayers’ interactions with Sars, to identify the organisation’s strengths and to highlight the areas that require improvement.
“There has never been a more critical time for us to assess how organisations and their tax functions are operating, responding to and coping with Sars audits, debt collection processes, voluntary disclosure programme applications, and overall service delivery, given Sars’ drive to improve voluntary compliance and regain taxpayer trust,” says PwC South Africa Tax Controversy and Dispute Resolution partner Elle-Sarah Rossato.
Since the publication of the first report in 2018, the tax environment has significantly changed, PwC states.
Part of Sars’ restructuring included the appointment of three deputy commissioners this year. Among these developments are the deployment of resources – including the appointment of more staff and the use of technology to revive Sars – and advancements in the enforcement field, it highlights.
KEY FINDINGS
The survey questions were designed to address Sars’ nine strategic objectives, which are noted to be crucial for both the organisation’s reconstruction and the successful and efficient collection of taxes.
The survey also aims to serve as an assessment of how efficiently Sars is achieving its objectives.
The survey asked if its participants believe Sars honours time periods to get a general perception of taxpayers regarding Sars’ response time. Only 4% said they ‘strongly agree’ with the proposition that Sars complies with time periods — 2% better than what participants said in 2022.
A combined 71% of participants said they ‘strongly disagree’ and ‘disagree’ that Sars honours its timelines.
When assessing corporate income tax (CIT), 53% of participants believe it is extremely likely that they will be selected for verification, compared with 47% in 2022.
Equivalent to last year’s results, 51% of participants said their CIT verifications take between one and three months to complete.
Thirty-four percent of participants said their CIT verification takes between three and six months to finalise – a marginal improvement from last year’s 30% (2021: 29%). Therefore, within a six-month timeframe, 85% of verifications are completed.
Nineteen percent of participants said a CIT audit is finalised within one to three months, which is a 5% improvement compared to 2022 (14%). An additional 3% of participants said their audits are finalised within three to six months.
Survey respondents indicated improved turnaround time for the finalisation of value-added tax (VAT) verifications compared to previous years.
Forty percent of participants said their verifications were completed within 21 days, a 4% increase from last year. Only 4% of participants said their verifications took more than 12 months to complete compared to last year’s 6%.
Participants were asked about their experience regarding the timeframe in which Sars paid out refunds. Twenty-six percent said Sars released a refund within 21 days, while 18% said Sars did not make payment of refunds within 21 days, or only did after follow-up enquiries from taxpayers.
Other sentiments from participants included that Sars did not offer feedback after multiple attempts of communication; challenges updating public officer details on Sars’ efiling system; that Sars respects timelines depending on the nature of the enquiry; and that Sars hardly ever adheres to deadlines, and when you call for a follow-up, agents are unaware of the proper deadlines or the requirements under the Tax Administration Act.
VDP
In August, Sars published a “Guide to the Voluntary Disclosure Programme (VDP)”. The VDP is a tool that enables taxpayers to ensure their historic tax records are accurate.
This year, 35% of participants said they had made use of the VDP process compared to the previous year’s 40%.
This year, 27% of participants said Sars declined their application owing to it not being ‘voluntary’ compared to last year’s 55%.
This year, 42% of respondents said their trust in Sars had increased (a decrease from 45% in 2022), while 58% (54% in 2022) said it had not.