The South African Revenue Service: Transformation and ... · 17/07/2003 10 Compliance climate •...
Transcript of The South African Revenue Service: Transformation and ... · 17/07/2003 10 Compliance climate •...
The South African Revenue Service:Transformation and Service Delivery
Annual Service Delivery Learning AcademyDurban, 11 July 2003
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Overview of the presentation
• Introduction
• The role of SARS
• SARS’ vision
• Transformation and Service Delivery
• Challenges
• Conclusion
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The value of interactions like this
• For a country in the throes of transformation, there are benefits in
sharing best practices, particularly in the public sector;
• The issues and challenges of transformation are similar and shared;
• The transformational success of SARS is dependent on the
transformational success of the nation as a whole;
• Consequently it is imperative that we share our lessons on
transformation and learn from the experiences of others.
The SARSexternal environment
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“No longer the lackluster bureaucratic outpost that SouthAfricans grew to love and ignore, SARS, as the agency isknown, is fast becoming the ravenous revenue machinethat every bona fide government needs and every citizendreads.”
New York Times
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Since 1995, the first full year of black-majority rule, the state treasury's annualtake has swelled by almost 100 percent.
Minister T Manuel
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“Not unexpectedly, the newfound zeal hasunnerved more than a few taxpayers.”
Moneyweb
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SARS’ role
economy
Statespending
Moneygeneratedby SARS
Borrowmoney
IMF
Enha
nced
serv
ice
deliv
ery
Ideally more
Ideally less
economy
-
+
(e.g. increasedinterest rates…)
Enhancedautonomy+
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The SARS environment
Tax gap
SARS’mandate
SARS’resources
State’sspendingrequirements
SA history
Current macro-economic andSocio-political conditions
Culture ofcompliance
Taxpayerbehaviour
Business environment
Industry factors
Sociological factors
Economic factors
Psychological factors
SARS’behaviour
SARS’history
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Compliance climate
• Some inroads made into non-compliance.
• Succeeding in identifying deliberate non-compliance.
• Still some way to go in adequately combating sophisticated and
aggressive tax planning.
• Insufficient inroads into organised crime.
• Insufficient inroads into cash (informal) economy.
• Impact of penalties plus additional tax plus prosecution has
improved levels of compliance.
• Some non-compliant taxpayers want to disclose, but fear total
reprisal.
What we aspire to
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Our vision
Commitment tocountry &constitution
Compliance:
• Voluntarycompliance
• Early detection ofnon-compliance
• Deterrence ofnon-compliance
• Anticipatedynamiccomplianceenvironment
• Differentiatedapproach tocompliance
SupportingGovernment:
• Support thedelivery ofessential publicservices
• Best practicemodel for publicadministration
Internally:
• Consistent,transparent &collaborativeactions
2. Professional,competent,approachable,flexible staff
3. Integrated &seamless serviceoffering
4. Service aimed atreducing compliancecost & makingcompliance aspainless as possible
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The future of revenue administrations
•Promotion of fiscal citizenship
•Promotion of national sovereignty
•Enabling the delivery of government services
•Leveling the economic playing field
•Expanding the role of RA to include benefit distribution
•Consolidation of service delivery across government
•Invoking principles of equity and removing tax bias
•Managing population registers
•Agency for tax
collection
•Protection of
economy
New Revenue AdministrationsOld RA’s
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Anticipating the future
• Effective, sharplyfocused, more flexible
• Community approachwhich censures non-compliance behaviour
• Consolidated view ofgovernment – offersseamless citizenengagement
•Increasedknowledge•Increasedsophistication•Smarter, moreknowledgeable•Morediscerning•Moredemanding
•Threats to existing tax base &national sovereignty•Interlinked economies•Taking on other government roles•Erosion of the base throughelectronic transacting, trade &financial liberation, increased labourmobility•Environmental scanning &anticipatory interventions = key togrowing collections•Do more with less, leverage info,mutually beneficial alliances
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Achieving our vision
Administrativesimplification
Administrativesimplification
Quality,Timely
processing
Quality,Timely
processing
Empowered staff
Empowered staff
Extended SARS
enterprise
Extended SARS
enterprise
Personalisedservice
Personalisedservice
Integrated Taxpayer
view
Integrated Taxpayer
view
Balanced,Differentiated
approach
Balanced,Differentiated
approach
•Extended reliance on 3rd party info, •Electronic Administration, •Collaborative
Less duplication = Less disruption
•Meeting expectations, •Segmentation,•Account managers•Max frontline resolution•Reward compliance
•Core competence = Skill + professionalism•Knowledge management•Motivated, skilled•Integrity
•Reduce TAT’s•Assurance mechanisms
•Simplify requirements,•Procedures & forms•Increased reliance on third party info
Transformation and Service Delivery
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Our transformational implementation
Pre-1997 1997 1998 1999 2000 2001 2002 2003 2003-onwards"SARS" pre-1997
Autonomy 1997
Diagnose current roll-outsDevelop newly defined strategies
Plan Gauteng Roll-out 2003 onwardsPilot newly defined strategy:
Large Business Office
Planning to changeRecognise the need to change
Starting to change- Siyakha "we are building introduced"-1999-2001
Experimenting: Test concepts & formulate strategies 2001-2002
SCU & Woodmead Roll-outs2000-2002
Rolled out KZN 2000-2002
Rolled out WC 2002-2003Based on KZN lessons learnt
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Our transformational timeline
“SARS” pre-1997 Autonomy 1997
• Fragmented: separate tax andcustoms departments
• Activities had a product focus (VAT,IT…)
• Bureaucratic and administrativeculture: mechanistic and inflexible
• Limited in its ability to attract, rewardand retain core expertise
• Promotion to management positionsbased on years of tenure
• Geographically spread• Service did not feature• Inadequate in terms of representivity
THE BEGINNINGS OF:• Increased accountability• Greater flexibility in employment practices• Devolution of decision making authority• Imposition of financial and planning
discipline• Upgrading of physical and processing
infrastructure• Commitment to employment equity• Recognition of the need for excellent
service• Exploration of technology enhancement
Concomitant increase in productivity
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Our transformational timeline (2)
Siyakha (“we are building”)Moving towards a process based
organisationImprove efficiencies – concentrate,
standardise, streamline,front office v back office
Processes first, technology laterTaxpayer service & education
BUT
No retrenchmentsInternal advertisements for posts –Siyakha protocol
OPERATIONALLY
Criminal InvestigationsIntelligence collectionHigh profile cases
Starting to change1999
Recognised the need to change
Identified key levers
Not a holistic change programme
Garnered support from our external stakeholders
Planning to change
Audit / CI / Collections as concentrated enforcementarm
SCU, Woodmead project
Business process engineering – high level
Exploring the role of business intelligence & risk
Increased the profile of enforcement action
Experimenting 2001 / 02
Concomitant increase inproductivity
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Our transformational implementation
Understanding our compliance climate andthe structure of our economy
Understanding why we do what we do
Understanding our environment
Development of strategy
SWOT analysis
Development of the comprehensivecompliance approach
Transformation of processes andtechnology
2003 / 06
Rolled out KZN / WC: Lessonslearned
Process needs to be more detailed
The way in which we clustered sub-processes was sub-optimal
Key accountabilities cannot be pinned onbusiness division e.g. revenue streamcollection, non-registration, non-filing
SLA’s between business units notoptimal – hand-offs, accountabilities
2000 / 03
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Challenges going forward: Sustaining themomentum and building capability
• Innovation and design of business products,processes and technology;
• Business and risk intelligence;• Planning, design and implementation capability;• Measurement and MIS;• Enablement of electronic transactions, e-SARS;• Skills development:
technical,professional,managerial andleadership;
• Change management and culturetransformation.
1
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Challenges going forward: Integrating businessproducts, processes and technology
2
All taxes
ITVAT
Customsetc
All functions
Taxpayer service
Assessing
Enforcement
Relationship & segment driven
E-based
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SARSaction
SARS action
Counter-thrust
SARS action
Counter-thrust
SARS action
Counter-thrust
Challenges going forward: Implementingorganic planning
3
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Spec
ific
alle
gatio
n O
f non
-com
plia
nce
Submit returnReceive, capture,
batch returnAssess returnNo risk
Risk
Investigation
Investigation
Collect
Assess
Assess
Suspicion ofcriminality
DatabaseRisk &
Intelligence process
Collect
Prosecute
Assess &prosecute
CollectG
eneric / General risk
MaintainAuditcycles
Refund
RefundRegister Allocate
riskscoring
Challenges going forward: Implementing new businessprocesses 4
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Organised Revenue CrimeOrganised Revenue Crime
Intentional nonIntentional non--compliancecompliance
Creative complianceCreative compliance
Capitulative / surrendered complianceCapitulative / surrendered compliance
Committed complianceCommitted compliance
Enfo
rcem
ent
Ris
k-ba
sed
case
sel
ectio
n
Mai
nten
ance
Ran
dom
cas
e se
lect
ion
Exam
inat
ion
Insp
ectio
n
Fina
ncia
l In
vest
igat
ion
Crim
inal
In
vest
igat
ion
Enco
urag
e vo
lunt
ary
disc
losu
res
of
non-
com
plia
nce
Compliance > enforcement
Challenges going forward: Implementing theCompliance regulatory model 5
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Taxpayers file and payeasily,
Communicate withtaxpayers, inform themof their obligations
Make it easy fortaxpayers to comply
Examine & inspectdeclarations toSARS
Investigatewhere wesuspectnon-compliance
Challenges going forward: Implementing theComprehensive Compliance Approach
6
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Conclusion
Our success is measured by:
• Revenue collected to meet Governmentneeds;
• Increasing levels of compliance; and• Improving the quality of our service and
the ease for taxpayers in meeting theirobligations.