Introduction
Ladies and gentlemen a warm SARS welcome to all of you. It’s really wonderful to know that so many of you have made the effort to be here and to share this historic day with us. I say historic for two reasons.
Fifty years ago today, the first human being was sent into orbit around the earth. His name was Yuri Gagarin, a Russian cosmonaut. That journey ushered in a new era of science and technology
At SARS we too have been on a journey – a journey that also makes use of the latest advances in science and technology.
Today SARS is using this technology to broadcast this workshop simultaneously to
38 cinemas around the country, on Summit TV and live on the web. And with the help of cellphones, it is allowing us to interactively engage with potentially tens of thousands of people simultaneously.
But more importantly, we have also been on a journey over the past four or five years to use technology to make radical improvements to our ability to ensure the maximum compliance with tax and customs legislation.
Later on this morning you will hear in more detail about the SARS journey of modernisation, which - in the end - is about improving our service to you, to make it easier for you to comply with your tax obligations.
The SARS Compliance Model
At SARS we strongly believe that in order to entrench a culture of tax compliance among our fellow citizens, we as the country’s revenue authority need to do three things, which are the three aspects of our compliance model.
The first thing we need to do is to render a world-class service to taxpayers. If taxpayers can experience ease and convenience in dealing with their taxes they will be more likely to be compliant.
We have seen this first-hand in our modernisation of personal income tax where we have seen a huge growth in compliance over the past four years in terms of taxpayers submitting their returns on time, in full and honestly. Your help as employers has been crucial to this success.
The second aspect is taxpayer education. We need to engage with taxpayers in a two-way and meaningful way. Today’s workshop is part of this outreach and education strategy so that taxpayers get the information they need to understand their tax affairs and the obligations they face.
However, for those who ignore our message of compliance or who intentionally engage in evasion, there must be clear and consistent consequences through enforcement of our country’s tax laws. Because if you are making your fair contribution, you deserve to know that everyone else is too! As we make it easier for all taxpayers to do the right thing we will equally make sure that those who don’t pay their fair share are brought into the fold – or suffer the consequences.
So a key part of compliance is a credible threat of action against those who don’t meet their obligations. In this regard, we introduced a new administrative penalty system at the end of 2009 in which taxpayers who submit their returns late are issued with monthly penalties. We also need a credible and effective method of
collecting on these penalties – and that’s where - once again with your help - the ITA
88 process has been invaluable.
We penalise people who are not compliant to be fair on those who take the time and trouble to meet the deadlines and their other obligations. Because letting people get away with non-compliance is unfair to the vast majority of people who do the right thing.
Administrative penalties for employers
This same principle must hold for all taxpayers – including employers. So from this year, we are extending administrative penalties to employers who fail to submit balanced reconciliations, complete employee tax certificates and up to date employee details to SARS.
Once again we are doing this to be fair to those employers who make every effort to meet their obligations and to work with us in making this system work. Like with the penalties for individual taxpayers, the penalties for employer non-compliance will be on a sliding scale depending on the level of effort an employer has made to comply.
And as with the income tax penalties, we will begin with the most non-compliant employers first.
So if any employer has ignored the deadline completely, they will receive the full penalty of 10-% of the PAYE withheld. But this penalty will be reduced in line with the effort made to meet your obligations.
You will hear about these penalties in more detail shortly during the workshop.
Conclusion
We all stand to benefit from improved compliance. When everyone pays their share, the burden on all of us is reduced.
Once again I would like to thank you for being part of this – both as South Africans and as important players in the tax process.
I hope that today marks the start of a new partnership between us, a partnership in which we work together to build compliance, to build our country, to grow our economy and to create jobs so that we can all enjoy the fruits of freedom.
Thank you.
Address by Commissioner of the South African Revenue Service Mr Oupa Magashula to employers, Tax practitioners and payroll administrators at the Paye workshop transmitted live via satelite to cinemas and on summit TV
