Select Page

SARS’ Mark Kingon recent talk at SAIPA’s 2023 Accounting iNdaba delves into measures the revenue service is taking to keep pace with technological advancements into the future.

Your content goes here. Edit or remove this text inline or in the module Content settings. You can also style every aspect of this content in the module Design settings and even apply custom CSS to this text in the module Advanced settings.

When the history – and tax accounting – books are written the last half decade will be notable for its massive impact on the way we live, work, and file. Every few months of the last five years some new world-changing event happened that changed how we do things.

The pandemic not only kept everyone at home and hugely impacted the economy, but it also had unintended side effects such as people starting side businesses while working from home or getting into collecting memorabilia. When someone who has only ever been a salaried worker now needs to deal with tax for a side hustle or when trading rare items worth millions, the conversations around how this is done need to happen.

Also during the pandemic the rise, and fall, of Tax Professional 11 cryptocurrency saw similar issues arrive that were even more difficult for even tax professionals to make sense of as the world looked on an entirely new form of money.

On a larger scale, problems escalate as companies are either spun up entirely to capture these new markets or large existing companies try to corner the market.

Now with COVID-19 increasingly behind us Artificial Intelligence (AI) has started the conversation on tax matters that still don’t have answers in South Africa, let alone the world. Who gets to profit from work made by an AI? How are the creators of data that the AI uses to train on being compensated? Can AI be used to teach more people about the complex nature of tax?

All these questions formed part of the discussions held at Accounting iNdaba. And according to Mark Kingon, Stakeholder Relations, SARS, taxation’s future has three facets: improving service, improving compliance and identifying non-compliance.

Improving Service

Kingdon touched on many aspects of how SARS is now and in the future working to modernise and improve services. SMSs from the governmental body, which were sent out earlier in the year by mistake with incorrect warnings of legal action, were one topic that came up in the panel discussion around services.

Kingon mentions the immense challenge of deregistered companies, liquidated companies, trusts, phone providers and other issues that boil down to data.


“And that comes again to data integrity.”

As we look at our tax base, your first starting point has to be a database of taxpayers that has integrity. If we use CIPC as a data source, we’ve got a challenge around deregistered and liquidated companies. Trusts are a bigger issue. And if we talk about individuals, we need to look at all individuals in the country and include people who may not have [an] ID, but do have a work permit here.

“How do we get them onto the register? Then we can get into the data sets, whether it be local or international… It has to be accurate. We are still on a journey with that,” Kingon says.

Many have referred to data being the modern-day equivalent of Gold but we can see that when the data isn’t accurate, it can be fool’s gold instead. As SARS improves its data sets and further transforms taxation through technology, differentiating between the two should be easier.


Improving Compliance

When discussing important document retention and the comparisons between old physical documents and the new data-centric approach, Kingon continues his focus on accurate data regardless of its original source.

“We speak of the data set ability to help us check compliance and assist with that. “But it’s also important to stop processes that delay refunds for some businesses We have to treat compliant taxpayers in a fundamentally different way to noncompliant ones and be able to instil some trust in the system,” Kingon says.

“That is important for me, because if we can get there, not only does it reduce the cost of doing business in our country, it reduces, obviously, the fees to taspayers. It also reduces our work. “If an international business coming to South Africa sees red tape galore, it is an obstacle to doing business in our country. We’ve got to ease that. And one of them is this cost of compliance.”

International trade and its issues around red tape and taxation are of particular importance right now as the Rand has suffered greatly, creating not only increased costs for local companies and individuals, but also upsetting existing tax structures.


Identifying Non-compliance

Identifying non-compliance may be the area where many find that AI could be of assistance. After all, one of the things AI is best at is looking at vast amounts of data and turning it into usable information. The AI that most makes the news is usually on the creative or visual side with deepfake technology perfectly replicating celebrities or the likes of Midjourney creating amazing pieces of digital art that were once the sole domain of artists with years of training. While this is impressive, it is the hard data science applications where AI could be most impactful, and where it could properly sort and verify the data that Kingon mentioned throughout the panel. On the side of small companies and individuals, AI also presents a huge cost saving compared to a tax professional. Isn’t it enticing to imagine an AI-driven system that can have all financials inputted and then simply output any non-compliance? For SARS the scope of identifying non-compliance is so vast but, unlike humans, AI scales and does not wilt at the prospect of a larger task.

But This is Maybe Not the Immediate Future.

Kingon adds that, in a meeting recently, it was postulated that tax rulings could be done by AI. Kingon is of the opinion that while this could be done partially, it could not be done fully just yet. An example he gives of a particular decision is AI determining if an item is tax deductible or not. He also adds that, as these advancements arrive, some still stuck in the old ways may encounter problems. “I think the old practitioners are going to struggle. I’ve got one practitioner, by the way, who still writes the letters out, takes a photo of it and sends it to me electronically. Not a PDF, a photo. I think that’s the biggest issue. And by the way, some of our letters still refer to a fax machine,” Kingon says. Only the future will tell if these old ways of working will be able to mesh with tomorrow’s digital transformation which is here today.