The South African Revenue Service’s Commissioner Edward Kieswetter stated that the agency has increased its use of data to provide a more streamlined experience for customers.
In a discussion with Wits Business School, Kieswetter said: “We use data to do risk profiling of every taxpayer. We use data and artificial intelligence to select taxpayers for further auditing or investigation, but we also use data and technology to provide a seamless experience for most taxpayers.”
“We believe that the best service is no service. We don’t want to be better at queue management, we want to address the root causes, so we don’t have queues.”
Use of Data in Tax Collection
The commissioner went on to add that SARS also employs data and artificial intelligence to identify potential taxpayers for further examination or investigation. The tax firm claimed that efforts to increase and enhance the use of data in order to improve the fairness of outcomes and boost its ability to detect instances of non-compliance are starting to bear fruit.
“Using the data from various domestic and international sources, as input into machine learning models, risk profiling and case selection, a number of trends have already been observed with positive outcomes in a number of instances.”
Data Analysis in Tax Administration
Some examples of domestic third-party sources that SARS said they would draw from include banks, retirement funds, medical insurance providers, and the companies register. The CSD (Central Supplier Database) from the National Treasury, as well as the national population register, are also viable sources.
SARS expanding its use of data to ensure a seamless experience for customers.
International data sources include the automatic exchange of information about South Africans with off-shore financial assets from about 100 foreign jurisdictions, as well as several mutual administrative agreements with sister organisations.
SARS highlighted the potential of data and machine learning in last year’s report, saying that 33% of its results came from automated risk profiling of taxpayers based on data and machine learning.
Recruitment
SARS is looking for employees who are skilled in data analysis in order to build a “smart tax authority“. The goal is to use data-driven insights, machine learning, algorithms, and artificial intelligence to better understand the tax system and improve services. With technology always changing, this is an important step in preparing for the future.
“In an era characterised by rapidly evolving technological innovation, SARS is preparing for a world where increasingly our work is informed by data-driven insights, machine learning, algorithms, artificial intelligence, and interconnectivity of people and devices,” it said.
Build a pool of experienced resources
Kieswetter stated that the revenue service intends to also create a pool of what are called ‘grey beards’ (and female equivalents) who not come back and work for the organisations but rather be part of a resource from which younger, less experienced people can gain knowledge.
“We are also introducing new graduates, young people, into the organisation so that we keep the generational mix,” he said. The organisation has also established a junior board to formalise the voice of individuals under the age of 35.
“We need to significantly step up our technology innovation capability, these are few and far between. So some of the skills we need for future orientation are hard,” he said, Kieswetter observed that it can be difficult to find employees with the specific skillset required for data science and government work. He described the process as inefficient and bureaucratic.
State capture
Kieswetter said that the actual damage at the South African Revenue Service from state capture “is significantly deeper than what any commission of inquiry could ever report”.
A Persistent Threat
He went on to say that he does not believe there are any institutions in the country that have been fully cured of state capture. The country’s political climate, with its competing claims for power – within a party or across parties – is an active battle to keep the endowment people gained from state capture alive, according to him.
South Africa is still recovering from state capture, which has seeped into this current administration. As illustrated by the corruption during the Covid response procurement phase, said Kieswetter.
In Conclusion
SARS is looking to expand its use of data in order to improve customer experience and increase tax revenue. The organization has recognized the importance of technology innovation and is preparing for a future where data-driven insights play a larger role in its operations. SARS also acknowledges that state capture is still a persistent threat in South Africa, and more work needs to be done to address the issue.
