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Building A Tax Compliant Society

01 May 2006   (0 Comments)
Posted by: TaxFind™
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Building A Tax Compliant Society

One thing is sure, the country is benefiting from the revenue collected.This boosts revenue yield and as a result, stretches the capabilities of the Finance Minister to press ahead with fiscal and social reforms whilst providing relief for taxpayers – an almost unrivalled feat in a developing country.  As the revenue and customs agency for the government, one of SARS’s major tasks is to collect all the tax and duties that are due to the state in terms of legislation.This would have been easy if all the citizens complied with the country’s tax laws. But that is not the case. 

Although most people prefer to comply and take the necessary steps to ensure they do, there are taxpayers who try to avoid, postpone or reduce their tax liability.There are also taxpayers who intentionally avoid tax through illegal businesses to increase their profits and even criminals who set up businesses with the main objective of deriving an income from SARS and taxpayers’ money.

SARS responds to these phenomena with a compliance model that both promotes voluntary compliance and addresses noncompliance.In a nutshell, the model has three elements - education, service and enforcement - informed by a good understanding of the environment.

By making use of education, improved service or enforcement of the laws, voluntary compliance is engendered through incentivising compliance, disincentivising non-compliance and reducing opportunities for non-compliance.Examples of incentives that promote compliance are targeted campaigns to educate people and measures to make it cheaper, easier and faster to comply such as the use of technology to improve access and the publication of step-by-step guides on how to complete a tax form.Disincentives refer to those actions that make people understand they will be caught and punished if they do not comply and measures to reduce opportunities for tax evasion. 

SARS’s Enforcement division undertakes by making use of education, improved service or enforcement of the laws, voluntary compliance is engendered through incentivising compliance, disincentivising non-compliance and reducing opportunities for non-compliance.

Examples of incentives that promote compliance are targeted campaigns to educate people and measures to make it cheaper, easier and faster to comply such as the use of technology to improve access and the publication of step-by-step guides on how to complete a tax form.Disincentives refer to those actions that make people understand they will be caught and punished if they do not comply and measures to reduce opportunities for tax evasion. 

SARS’s Enforcement division undertakes various actions to ensure compliance with the law. Activities include risk assessments, inspections and audits.Enforcement’s criminal investigators step into action when criminal activity is suspected.They investigate specific allegations of noncompliance and see the case through to prosecution.

This contributes to compliance as a prosecution and sentence send out a message to both the offender and the wider community that you will be punished if you don’t comply.It also rectifies past noncompliance and encourages voluntary compliance in the future.

This division’s performance has been significantly enhanced by business intelligence and increased risk-profiling capability over the past decade.This involves the use of risk management techniques to target high-risk areas and transactions for enforcement interventions such as conducting risk-based and random audits, as well as pursuing a community approach that builds strategic alliances and seeks collaboration with industry and professional bodies.

Last year more than 7 000 new taxpayers were identified and registered as a result of enforcement actions. In addition, a number of successful industry-related campaigns as well as various high profile cases have contributed to an increased perceived likelihood of being investigated, an improvement in citizens’ awareness of their responsibility to pay tax, and an increase in voluntary disclosures in respect of past noncompliance."In order to become a truly effective tax administration, we will engender a compliance approach that incentivises compliance, disincentivises non-compliance and reduces the opportunities for noncompliance through education, service and enforcement activities.” Commissioner Pravin Gordhan

Source: By TaxTALK


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