2014/15-2018/19 STRATEGIC PLAN & 2014/15 ANNUAL PERFORMANCE PLAN Presentation to the Standing Committee on Finance 01 July 2014
Agenda • SARS Mandate • Highlights of SARS business • SARS Strategy • Strategic outcomes 2
SARS mandate • Collect all revenue • Ensure compliance with tax and customs law • Customs service – revenue, manage borders and trade • Advise Minister of Finance • Advise Minister of Trade and Industry 3
Core outcomes of SARS strategy 4
Compliance is at the core of SARS strategy • The Compliance Strategy seeks to: – encourage voluntary compliance – establish an uncomplicated system that deals fairly with those in it and minimises leakages – increase its focus on bringing those outside the system into it 5
Compliance levers • Education – Taxpayers that are aware of their rights and obligations are more likely to comply • Service – Providing a professional, fair and efficient service promotes compliance • Enforcement – Credible enforcement promotes fairness and deters non- compliance with tax laws 6
Levers in action • Differentiate among sectors of the taxpayers • Breadth, depth and leverage • Collaboration with other government institutions • Ensure integrity of SARS systems and people 7
Strategy map for SARS core strategy Revenue Tax & Customs Compliance Education Enforcement Service Segment Mgt. Channel Mgt. People Capability 8
Compliance challenges in the medium term • Trends have shown improving compliance levels • Slower economic growth will place pressure on the projected revenue collection • Global trends of tax base erosion and profit shifting through aggressive avoidance and evasion schemes • Growing illicit economy – e.g. cigarette smuggling • Growing disquiet about government spending 9
Therefore • Maintain and improve public trust in SARS • Maintain and improve compliance levels • Respond to non-compliance early • Increase capability to interdict illicit trade • Combat unacceptable avoidance • Enhance collaboration with other government institutions 10
SARS business at a glance 1. Education 2. Service 3. Enforcement Legislation & mandate Registration Core process Filing Education Licensing Declaration Deregistration Payment Dispute Management Receivable Management Education & Outreach 2013/14 Footprint: Education • 4 Branches 51 Audit & Judicial campaigns • Mobile Tax Unit 9 Investigations Process Employers 2 096 • Campaigns Ports of entry 34 to Capability to handle 4 channels (electronic, telephonic, postal and walk-ins) Employees 2 144 Pieces of legislation - 22 Total Register – 25 mil (20.3 mil active) Co-locations 1 441 • Individuals (active): 17 mil • Companies (active): 3 mil Campaigns 647 MTU's • Trusts (active): 0.3 mil In-depth audits 19568 through Number of filing transactions – 25 mil Points of 5 720 Investigations concluded 333 Queries addressed – 10 mil service Tax entities audited (compliance audits) – 1.8 mil Court cases supported 267 Schools 234 Revenue collected – approximately R900 bn. Interventions Number of visitors to branch offices – 6.38 mil (2012/13) at Branches 574 Operating expenses – 0.97% of revenue collected Headcount – 14 137 (2013/14) Institution/ MTU served approx 720,000 people Visited 3 516 organisation 11
Over the medium term, SARS must collect… 2014/15 2015/16 2016/17 993 650 1 095 100 1 208 720 Revenue 10.4% 10.2% 10.4% Nominal growth % Source: 2014 Budget 9,440 9,899 10,509 SARS Budget -1% 5% 6% Increases Y-o-Y 5.6% 5.5% 5% Expected Inflation (MTEF) 12
Over the medium term, funds SARS will receive… 12000 000 10508 911 9898 708 10000 000 9534 393 9440 321 10133 459 9457 969 8832 010 8000 000 8238 757 Rand Value R'000 6000 000 4000 000 2000 000 Projected Cost ENE Allocation - 2013-14 2014-15 2015-16 2016-17 Year 13
Revenue composition 2013/14 127.6 , 14% Marginal tax rate 44.1 , 5% Personal Income Tax 310.9 , 35% Companies Income Tax 1994/95 1995/96 2010/11 2011/12 2012/13 237.8 , 26% Value Added Tax PIT % 43% 45% 40% 40% 40% Customs duties 179.5 , 20% Other taxes CIT % 40% 35% 28% 28% 28% 14
Revenue growth 1994-2014 1 000.0 899.8 900.0 813.8 176.0 800.0 151.1 11.5% 700.0 600.0 495.5 500.0 90.9 400.0 723.8 662.8 300.0 220.3 34.3 200.0 404.6 113.8 16.4 100.0 186.0 97.4 - 1994/95… ...2000/01… ...2006/07 2012/13 2013/14 Tax Customs 15
Priorities… • Enhance technical capability of staff • Single registration of taxpayers across government • Implement Customs Bills and WTO trade facilitation • Refined approach to taxpayer segments (e.g small business) • Regulation of intermediaries • Improved management of complaints • International exchange of taxpayer information • Border management 16
Thank You! 17
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