SARS announced in a new tender, on 26 August 2024, appointment to a panel of specialist tax consulting firms, for a period of 5 years. This means that SARS will immediately be able to gain access to the best private tax minds in the country to help catch tax evaders, tackle non-compliance as well as get additional tax brainpower to deal with highly complex and sophisticated tax structures.

The Tender “RFP15/2024 – Appointment of a panel of service providers to provide tax consulting services to SARS for a period of five (5) years” is not clear how many panel members will be appointed. However, each panel member can submit the resumes of up to minimum 88 tax specialists, ranging from Junior to Senior tax professionals and which is explainable taken that the tender covers all tax types and a vast array of technical and tax compliance related items.

Kieswetter Addresses Two SARS Challenges

The two main challenges faced by SARS, being (a) enough quality resources as well as (b) the expertise to understand the most complex tax avoidance or evasion schemes will almost instantly be fixed. The capacity of SARS to take on far more complex tax matters, including forensic audits and corporate restructures, will immediately be bolstered. The same tax practitioners who have for years complained about SARS not doing enough to combat aggressive tax structures punted by some firms or advisors as well as those frustrated by widespread and blatant poor service delivery; can now join “Team SARS”!

The Tender Suggests the Panel Members will be Given SARS Teeth

Most notably, and for taxpayer’s to be aware of, is that the panel, once appointed, will also engage in taxpayer and trader communications, telephonically, by written correspondence, and through virtual meetings. 

The panel will be empowered to raise assessments, conduct audits, and even collect on taxes due to SARS, fulfilling the revenue authority’s mandate.

Private Expertise is a Global Accepted Practice

It is not new that you need to have private practice expertise to be a good Revenue Collection Official and vice versa. According to Dr Keith Engel from the South African Institute of Taxation, in the United States Treasury, there is a desired component of private sector experience before you can get a senior appointment. This allows a tax collector to know where to look and how to ask the right questions by having served in the private sector. There is obviously protection mechanisms build into the United States Code to protect against abuse, and this SARS new initiative appears to incorporate some of the same principles.

Closer to home, Mauritius has recently started getting guidance on how to deal with the global minimum tax threshold of 15%. Their Minister of Finance, Dr. Hon. Renganaden Padayachy, is taking active steps to get Mauritius to the best possible compliance status by seeking to join the OECD, as this gives foreign capital the comfort of a well-regulated safe haven.

Nervous South African Taxpayers

SARS cannot make clearer their zero-tolerance on taxpayer and trader non-compliance. This latest initiative by enlisting specialised tax consulting and compliance services from the private sector, means that taxpayers on the wrong side of the law will have higher risk of detection and tax aggressive schemes will face even better technical scrutiny. 

Taxpayers who feel that their compliance may not be up to standard, should get a good independent look. This is ideally done by a tax firm which has the depth of expertise to deal with tax planning and compliance, as well as where engagements are under tax attorneys who ensure tax legal privilege. 

We see in daily practice how a taxpayer’s lifelong work and dedication to wealth creation gets materially harmed by SARS throwing the book at someone. The approach to first come clean through a well designed roadmap and SARS Voluntary Disclosure Program remains invaluable where correctly executed.

Written by Jashwin Baijoo, Associate Director and Head of Strategic Engagement & Compliance at Tax Consulting SA