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- SARS says it has had "early success" using advanced methods of risk profiling.
- This has allowed it to sniff out noncompliant taxpayers, including thousands of entities that have PPE procurement contracts with government.
- It also said it was probing several South Africans linked to the Pandora Papers.
The SA Revenue Service (SARS) says it has had "early success" using advanced methods of risk profiling, including machine learning, to sniff out noncompliant taxpayers – including thousands of entities that have PPE procurement contracts with government.
The latter include some 1 900 entities with over R6 billion in contracts, but which are not registered as VAT vendors.
A further 2 380 VAT-registered vendors have filed nil returns, despite having earned collectively over R9 billion from government contracts, SARS said.
"The work of regularising the affairs of these taxpayers is well under way. An initial R220 million additional assessments have been raised; almost R75 million fraudulent refunds prevented; with debt collection efforts in progress. In each instance, SARS also considers whether criminal prosecutions are applicable," SARS said.
It established this through analysis of the Central Supplier Database, it said.
SARS also said it was probing a number of South Africans linked to the Pandora Papers – some 12 million financial records that reveal hidden owners of offshore companies, secret bank accounts and other assets.
The tax agency – which has been ramping up efforts to boost revenue collection - has been cracking down on errant taxpayers. Among other things, it has been gathering data from domestic and international sources which are input into machine learning models for risk profiling and case selection.
'Positive outcomes'
"A number of trends have been observed with positive outcomes", according to SARS.
Of some 26 000 individuals with economic activity or assets over R1 million, near 1 000 have been identified as involved in money laundering or other serious crimes, SARS said.
Another 50 people – identified from a batch of 275 with assets abroad – are facing "further scrutiny" relating to assets in tax havens.
"We are working with the IRS in the US, utilising the Foreign Account Tax Compliance Act (FATCA), which has assisted in connecting a number of South Africans with links to the Pandora disclosures, and investments into a number of states," SARS said.
Last month, SARS said more than 75 million financial accounts – representing assets of around €9 trillion (~R160 trillion) – were automatically shared between countries as part of a global agreement.
On Thursday, SARS said that it had collected over R172 billion revenue from compliance efforts in the prior financial year, and that it has already collected R115 billion from compliance activities in the current year. Of this, about 33% is due to automatic risk profiling of taxpayers using data and machine learning.
The third-party sources it gathers data from include banks, retirement funds, medical insurance providers, the properties deeds office, the companies register, the national register of motor vehicles, the National Treasury central supplier data base, as well as the national population register.
International data sources include the automatic exchange of information on South Africans with off-shore financial assets from about 100 foreign jurisdictions.
The tax agency has also relied on whistleblower reports and third-party data sources to launch a wide-scale probe, deploying over 90 employees on a search and seizure operation that identified 11 entities and 27 taxpayers for potential fraudulent disclosures.
Criminal investigations have resulted in over 70 convictions this year.
