The Journey of Tax Statistics in South Africa: Presentation made at the ICTD Annual Centre Meeting Arusha, 2015

1. |
The Journey of Tax Statistics in South Africa
Revenue Planning, Analysis , Reporting and
Research Division,
South African Revenue Service
2014 Annual Meeting of the
International Centre for Tax and Development
09 December 2014, Arusha, Tanzania
1

2. |
Contents page
• Data Analytics, the new Frontier
• Initiation of African Tax Statistics Bulletin
• Evolution of Tax Statistics in South Africa
• Practical approach
• Engagement with stakeholders
• Highlights from the Tax Statistics 2014
• Future developments
2

3. |
What is Analytics?
The term Analytics refers to the use of
data and related insights developed
through applied analytical disciplines like
statistical, contextual, quantitative,
predictive, cognitive and other models to
drive fact based planning, decisions,
execution, management, measurement
and learning.
“Re-Imagining the Possible with Data Analytics”
MIT Sloan Management Review and SAS
Institute Research Report – Spring 2013

4. |
The extensive use of electronic forms by taxpayers to provide
information to SARS has lead to;
• Data being available more timeously;
• More accurate data;
• More complete data
The use of third party data further improves data accuracy and
completeness
Administrative changes provided for a more comprehensive and
cohesive view of taxpayers and even the potential tax base, e.g.
• Employers now have to register employees for Personal
Income Tax even if their earnings are below tax threshold;
• Single Tax Registration, which provides for a taxpayer-
centric view, a picture of economic activity through tax lens
SARS’
modernisa/on
changes
led
to
vastly
improved
data
quality

5. | 5
Analytics
Cash flow
and revenue
collection
monitoring
Repeat revenue
reporting and
analysis; ad
hoc reports;
modelling
Revenue
forecasting
Taxpayer
behavioural
modelling
Data Analytics assists forecasting and sustainable
fiscal planning, inter alia

6. |
VALUE JOURNEY OF SARS TAX STATISTICS
6
0
2
4
6
8
10
12
14
Compliance to
access to
Information
Act
Improved
Operations
plan
Improve
SARS
Strategy
Improve
Fiscal
Planning
Improve
Economic
Plans
Improve
National
Development
Planning
ValueAdd
ß1990
2008
à2030
Period of Great recession 2008- 2011
2012/13
2014/15

7. |
Initiation of African Tax
Statistics Bulletin
7

8. |
Harmonising African Revenue Statistics
8
• First meeting of Revenue Statistics in Africa project held in
Addis Ababa on 25-26 November 2014, attended by Cameroon,
Senegal, South Africa and Tunisia.
• Emulate OECD statistics publications in Latin America and
Caribbean, as well as Asia and Pacific Islands.
• Championed by OECD, ATAF, AU Commission, ADB, WCO
and CREDAF.
• Publication of 1st edition of Revenue Statistics in Africa early
2016, with a view to extend coverage beyond first 4 countries.
• Providing international comparable statistics tax and customs
policy makers will improve foundation for policy analysis.
• Comparable statistics also facilitate transparent tax policy
dialogue and data to assess fiscal reforms and make relevant
policy recommendations for developing and emerging countries.

9. |
EVOLUTION OF TAX
STATISTICS IN SOUTH
AFRICA
9

10. | 10
RELEASE DATES OF PREVIOUS PUBLICATIONS
v Chronology
of
publica/ons:
§ 1st
edi/on
–
2008
Tax
Sta/s/cs,
released
on
5
December
2008
§ 2nd
edi/on
–
2009
Tax
Sta/s/cs,
released
on
18
March
2010
§ 3rd
edi/on
–
2010
Tax
Sta/s/cs,
released
on
23
February
2011
§ 4th
edi/on
–
2011
Tax
Sta/s/cs,
released
on
22
February
2012
§ 5th
edi/on
–
2012
Tax
Sta/s/cs,
released
on
22
October
2012
§ 6th
edi/on
–
2013
Tax
Sta/s/cs,
released
on
21
October
2013
§ 7th
edi/on-­‐
2014
Tax
Sta/s/cs,
released
on
04
November
2014

11. | 11
OBJECTIVES OF THE TAX STATISTICS BULLETIN
The
Tax
Sta/s/cs
published
jointly
by
SARS
and
Na/onal
Treasury,
was
conceived
with
the
following
objec/ves:
v Make
available
informa/on
pertaining
to
tax
administra/on
as
required
by
the
Promo/on
of
Access
to
Informa/on
Act,
2000
v Amplify
fiscal
transparency
as
key
contributor
to
building
democracy
v Enrich
policy
debates
ensuring
that
public
sector
meet
the
development
agenda
of
South
Africa
v Provide
tax
indicators
that
are
correct
and
comprehensive
to
facilitate
evidenced-­‐
based
economic
insights
v Empower
research
of
economists
and
other
professionals
to
add
to
a
tax
body
of
knowledge
v Inform
private
sector
evalua/on
of
market
segments
and
other
commercially
relevant
informa/on
We
aimed
to
make
the
Tax
Sta/s/cs
Bulle/n
the
most
comprehensive
tax
sta/s/cal
publica/on
that
should
inform
the
community
about
what
taxpayers
have
been
repor/ng
to
SARS.
Equally
it
should
be
a
valuable
informa/on
resource,
par/cularly
for
academics,
researchers,
scru/neers
and
the
media.
Importantly,
it
should
reflect
the
ethos
of
an
open
and
accountable
tax
and
customs
administra/on.

12. | 12
SOURCE OF DATA OF THE TAX BULLETIN
v Data
is
derived/extracted
from
SARS
core
systems
by
tax
or
fiscal
year,
as
applicable
from:
§ Tax
register
§ Tax
returns
and
assessments
§ Declara2ons
and
assessments
§ Payments
and
refunds
§ Bills
of
entry
v Data
made
available
in
aggregate
format
to
ensure
taxpayer
confiden/ality

13. |
PRACTICAL GUIDE
13

14. |
KEY CONSIDERATIONS FOR PUBLISHING TAX STATISTICS
14
v Enabling
legisla/on
v Tax
Administra/on
Act
v Promo/on
of
Access
to
Informa/on
Act,
2000
v Complementarity
of
tax
admin
data
with
na/onal
sta/s/cs
v Administra/on
capacity
v Leadership
support
v Awareness
and
support
of
officials
v Technical
competence
v Modernisa/on
of
systems
and
processes
v 3rd
party
data
v Improving
taxpayer
compliance
v Stricter
applica/on
of
legal
provisions
(para
19(3);
‘80/20’
rule)
v Policy
changes
v Changes
to
registra/on
rules
and
threshold

15. |
RETURN ON INVESTMENT SINCE THE MODERNISATION
JOURNEY BEGUN
v Cost
to
tax
revenue
ra/o
decreased
from
1.04%
in
2008/09
to
0.97%
in
2013/14
v Opera/ons
net
aeri/on
during
same
period
equalled
1
557,
equa/ng
to
an
annual
staff
cost
saving
of
R412
million
v Opera/ons
salary
bill
grew
by
only
2.5%
over
past
3
years
v The
Risk
Engine
has
yielded
more
than
R51bn
in
refunds
savings
since
2007
v Administra/ve
Penal/es
paid
by
more
than
672
000
taxpayers
since
1
Jan
2010
amount
to
+/-­‐R2.8bn
v The
SMS
campaign
has
collected
+/-­‐R4.6bn
of
debt
<R50000
in
2013/14
and
already
+/-­‐R2bn
in
this
FY.

16. |
ADDITIONAL ACHIEVEMENTS SINCE THE
MODERNISATION JOURNEY BEGUN… (1)

17. |
IMPACT OF MODERNISATION ON FILING SEASON 2013
During
the
most
recent
Filing
Season,
v 93%
of
returns
were
assessed
within
three
seconds
and
85%
of
refunds
were
paid
within
24
hours.
v 99.9%
of
returns
submieed
electronically
v 97.6%
of
returns
assessed
within
48
hours
v 94.5%
of
refunds
paid
within
72
hours
v About
645
000
new
taxpayers
registered
and
submieed
a
return
for
the
first
/me
v More
than
1.7
million
outstanding
returns
from
previous
years
submieed
and
processed

18. |
Improved turnaround times had unintended
Services consequences

19. |
ENGAGEMENT WITH
STAKEHOLDERS
19

20. |
ENGAGEMENT WITH STAKEHOLDERS
20
Tax
Sta/s/cs
Bulle/n,
SARS
and
Na/onal
Treasury
engages
with
users
and
general
public
through
the
following
interven/ons:
• Tabula/on
of
Tax
Sta/s/cs
Bulle/n
along
with
legisla/ve
Budget/MTBPS
document.
• Presenta/on
to
relevant
Parliamentary
bodies,
such
as
the
Standing
Commieee
on
Finance
(SCOF)
• Hos/ng
workshops
at
the
release
of
the
publica/ons
(mainly
to
highlight
themes,
new
content
or
clarify
any
previously
iden/fied
misinterpreta/on
of
data.
• Hos/ng
regular
workshop
sessions
with
users,
to
solicit
input
on
“wish
list”
for
on
coming
publica/on
and
show
case
research
generated
from
the
Bulle/n
• On-­‐going
engagement
with
stakeholders
via
the
SARS
w e b s i t e
a n d
t h e
d e d i c a t e d
e m a i l
a d d r e s s
taxsta/s/cs@sars.gov.za

21. | 21
FEEDBACK FROM USERS COLLATED OVER PREVIOUS
YEARS (1)
Feedback/comments
on
the
Tax
Sta/s/cs
publica/ons
have
been
mostly
posi/ve
and
included
a
broad
range
of
requests
for
addi/onal
data
and
informa/on
Several
ar/cles/papers
quo/ng
the
tax
sta/s/cs:
• “The
levels
of
corporate
income
tax
(CIT)
collected
by
the
South
African
Revenue
Service
(SARS)
are
only
now
beginning
to
recover
from
the
2008
financial
crisis,
SARS
said
on
Tuesday.”
(Business
Day,
Corporate
tax
only
recovering
now,
SARS
says,
November
04
2014)
• “Efficiency
improves,
but
young
and
old
vulnerable.”
(Moneyweb,
Four
key
trends
from
SARS’
tax
staPsPcs,
05
November
2014)
• “The
South
African
Revenue
Service
(SARS)
says
taxable
income
among
the
employed
youth
has
increased
by
more
than
12%
a
year
in
the
past
10
years.”
(SABCNews,
Youth’s
taxable
income
on
the
increase:
SARS,
4
November
2014)

22. | 22
FEEDBACK FROM USERS COLLATED OVER PREVIOUS
YEARS (2)
Several
ar/cles/papers
quo/ng
the
tax
sta/s/cs:
• 6
Million
South
Africans
pay
tax
–
IOL,
21
October
2013.
• SA
tax
revenue
has
recovered
–
St
Francis
Chronicle,
21
October
2013
• Gordhan
saved
country
from
junk
status
–
Business
Day,
27
October
2013
§ 3.3
Million
South
Africans
pay
99%
of
all
income
tax
–
News24,
20
November
2013.

23. | 23
FEEDBACK FROM USERS COLLATED OVER PREVIOUS
YEARS (3)
• “The
latest
Tax
StaPsPcs
bullePn
has
some
interesPng
things
to
tell
us
about
our
economy
and
our
society”
(Hilary
Joffe)
–
Business
Day
22
October
2013
• “Working
with
the
recently
released
2013
SARS
staPsPcs
is
a
pleasure.
They
give
true
meaning
to
transparency
in
the
budgetary
process”
(MaRhew
Lester)
Business
Day,
23
October
2013

24. | 24
FEEDBACK FROM USERS COLLATED OVER PREVIOUS
YEARS (4)
• Several
ar2cles/papers
quo2ng
the
tax
sta2s2cs:
o “Gordhan's
stats
illuminate
the
Budget,
and
the
country”
–
Sunday
Times,
MaRhew
Lester,
February
2011
o “The
Tax
Base
in
South
Africa”
–
IMSA,
Professor
Heather
McLeod,
August
2011
o “For
taxpayers,
it’s
a
case
of
hurry
up
and
wait”
–
Business
Day,
Beric
Croome,
May
2011
o “More
taxing
2mes
ahead”
–
Mail
&
Guardian,
Maya
Fisher-­‐
French,
October
2011
o “South
Africa's
hidden
economy”
–
Mail
&
Guardian,
Kevin
Davie
and
Sipho
McdermoR,
August
2011

25. | 25
FEEDBACK FROM USERS COLLATED OVER PREVIOUS
YEARS (5)
Ø Tax
sta2s2cs
has
in
some
instances
been
misinterpreted:
o “SA
employers
earn
less
than
cleaners”
–
Mike
Schussler,
October
2011
o “SA
dare
not
let
its
tax
base
shrink”
–
Business
Day,
David
Gleason,
November
2011
Ø Common
misinterpreta2ons:
o 4.5
million
Personal
Income
Taxpayers
account
for
Tax
base
o PIT
Base
narrowly
interpreted
as
being
only
those
taxpayers
that
are
required
to
submit
o Annexure
Tables
not
read
with
content
of
chapters
o PIT
per
province
used
as
being
indica2ve
of
economic
ac2vity
o CGT
not
accounted
for
(Forms
part
of
income
tax)

26. |
HIGHLIGHTS FROM 2014 TAX
STATISTICS
26

27. |
v Chapter
1:
Revenue
Collec2ons
provides
a
summary
of
aggregate
tax
revenue
collec/on
trends
from
2009/10
to
2013/14.
v Chapter
2:
Personal
Income
Tax
(PIT)
gives
an
overview
of
assessed
personal
income
tax
revenues
of
registered
individual
taxpayers.
It
also
provides
informa/on
about
taxable
income
by
income
group,
age,
gender,
municipality
of
residence
and
source
of
income,
as
well
as
fringe
benefits,
allowances
and
deduc/ons.
v Chapter
3:
Company
Income
Tax
(CIT)
gives
an
overview
of
company
income
tax
revenues.
Informa/on
about
taxable
income
by
income
group,
sector
and
type
of
business
as
declared
in
the
tax
returns
is
also
provided.
v Chapter
4:
Value-­‐Added
Tax
(VAT)
provides
a
breakdown
of
VAT
liabili/es,
receipts
and
refunds,
by
sector
and
payment
category,
as
well
as
an
overview
of
input
and
output
VAT
data
derived
from
VAT
returns
submieed
by
vendors.
27
CONTENT OF TAX STATISTICS 2014

28. |
28
v Chapter
5:
Import
VAT
and
Customs
Du2es
provides
informa/on
about
the
customs
value
of
imported
goods
by
product
type,
according
to
the
Harmonised
System
(HS)
at
chapter
level,
as
well
as
Import
VAT,
Customs
duty
and
Ad
valorem
excise
duty
revenues
on
imported
goods.
v Chapter
6:
Other
Taxes
and
Collec2ons
provides
informa/on
about
taxes
such
as
Capital
Gains
Tax
(CGT),
Transfer
duty,
Mineral
and
Petroleum
Resources
Royalty
(MPRR)
(previously
provided
in
Chapter
1),
Southern
African
Customs
Union
(SACU)
payments
and
Diesel
refunds.
CONTENT OF TAX STATISTICS 2014 (CONTINUED)

29. | 29
HIGHLIGHTS 2014 TAX STATISTICS

30. |
Revenue recovered post recession, but at reduced rate
30
Source: SARS

31. |
Residential data declared on PIT returns used to
establish regional taxpayer footprint
31
City of Johannesburg

32. |
40%
67%
78%
84% 87% 91% 94%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
15 - 24 Years25 - 34 Years35 - 44 Years45 - 54 Years55 - 64 Years65 - 74 Years > 74 Years
12 months
11 months
10 months
9 months
8 months
7 months
6 months
5 months
4 months
3 months
2 months
1 month
Overall, 73% of those employed during the 2013 tax year were employed for the full year
Only 40% of 15-24 year olds remunerated for employment during the 2013 tax year were
employed for the full year
Older employees are more likely to be employed throughout the tax year
Interesting labour market dynamics eg.
Employed youth less likely to be employed
throughout the year

33. |
CONCLUSION
33

34. | 3434
OECD COMPLIANT ACCOUNTING FOR REVENUE DATA

35. | 3535
FUTURE INNOVATIONS
v As
per
usual,
expanding
content
v Addi/onal
agent
data
v Broaden
web
use
v Accessibility
v Interac/ve-­‐ness
and
Customisa/on
of
data
v Frequency
of
update
v Strengthen
administra/on
capacity
v Broadening
and
deepening
skills
sets
v Managing
succession
risks
v Tighten
governance
structure
v Reference
to
New
Zealand’s
Official
Sta/s/cs
System
v Sta/s/cal
standards
v On
going
user
educa/on/
awareness
v OECD
compliant
revenue
sta/s/cs

36. |
THE END
36
36

37. | 37
DISCONTINUATION OF THE PRE- 1990 PUBLICATION
v In
1991,
the
former
Department
of
Inland
Revenue
suspended
the
publica/on
of
the
Sta/s/cs
Bulle/n.
v At
that
/me
the
bulle/n
was
published
annually
and
released
to
a
broad
range
of
recipients,
such
as
local
and
interna/onal
universi/es,
financial
ins/tu/ons,
government
departments
and
the
general
public.
v The
last
bulle/n
was
issued
with
1989/1990
data
on
Sta/s/cal
Bulle/n
no.
8,
1990.
This
was
mainly
due
to
discon/nua/on
of
legacy
systems,
reforms
and
the
introduc/on
of
the
New
Income
Tax
System
(NITS).
v Mainly
tabular
form;
with
limited
analysis.

38. | 38
RE-LAUNCH OF THE TAX STATISTICS 2008
v SARS
and
Na/onal
Treasury
agreed
to
pursue
the
(re)
publishing
of
a
detailed
sta/s/cal
bulle/n
in
2008.
v SARS
contracted
the
services
of
the
Bureau
for
Economic
Policy
and
Analysis
(BEPA)
at
the
University
of
Pretoria
(UP)
to
assist
with
the
ini/al
compila/on,
evalua/on
and
development
of
the
Bulle/n.

39. | 39
TAX ADMINISTRATION VALUE CHAIN
Administrative
Resolution
Potential
Register
SARS
Register
SARS
Active
Register
Timely &
Accurate
Return
Filing
Timely
Assessing/
auditing &
raising of
debt
Timely
Payment
Mechanical
Collections
Enforced
Collections
Gross Revenue Collections
Non-registration
Non-filing
Non-payment
Registration backlogs
Return to taxpayer/
Extensions granted
Assessing backlogs
Objections/Deferral
of payment
Enforcement
Actions
Incorrect disclosure