{"id":1834,"date":"2023-09-06T09:45:57","date_gmt":"2023-09-06T07:45:57","guid":{"rendered":"http:\/\/www.ezfreight.co.za\/index.php\/2023\/09\/06\/digitalisation-of-tax-administrations-and-contemporary-issues\/"},"modified":"2023-09-06T09:45:57","modified_gmt":"2023-09-06T07:45:57","slug":"digitalisation-of-tax-administrations-and-contemporary-issues","status":"publish","type":"post","link":"https:\/\/www.ezfreight.co.za\/index.php\/2023\/09\/06\/digitalisation-of-tax-administrations-and-contemporary-issues\/","title":{"rendered":"Digitalisation of Tax Administrations and contemporary issues"},"content":{"rendered":"<p><span style=\"font-family: georgia, palatino, serif\"><span style=\"font-size: 12pt;line-height: 150%\">5 September 2023 &#8211; Find below the keynote address by Mr Edward Kieswetter, C<\/span><span style=\"font-size: 12pt;line-height: 150%\">ommissioner for the South African Revenue Service (SARS) <\/span><span style=\"font-size: 12pt;line-height: 150%\">and vice-chairperson of the African Tax Administration Forum (ATAF), <\/span><span style=\"font-size: 12pt;line-height: 150%\">on the occasion of the 2nd Network of Tax Organisations (NTO) technical conference under the theme &#8220;Digitalisation of Tax Administrations and contemporary issues\u201d on 5 September 2023 in Cape Town.<\/span><\/span><\/p>\n<p><span style=\"font-family: georgia, palatino, serif\">I was very excited to learn that the theme for this conference would be <em>on the digitalisation of tax administrations and contemporary issues. <\/em>My sense though, is that as global tax leadership representatives we cannot talk amongst ourselves, as this is often akin to preaching to the converted. We have to engage the broader stakeholders in the tax eco-system be they:<\/span><\/p>\n<ul>\n<li><span style=\"font-family: georgia, palatino, serif\">Policy makers who must ensure that relevant and proactive development of tax legislation and policies appropriately remain relevant to a rapidly changing digital and virtual world, the proliferation of tax crime while securing\u00a0 the rights of taxpayers in a fair and equitable manner,<\/span><\/li>\n<li><span style=\"font-family: georgia, palatino, serif\">National Treasuries &#8211; who, if I listen to my colleagues at the OECD and Forum for Tax Administrations (FTA), from around the world &#8211; have not made adequate investment in the collection capability of Revenue Administrations. This is a rather unfortunate austerity approach that fails to see the strategic role Revenue Authorities play in the longer-term fiscal integrity and sovereignty of countries,<\/span><\/li>\n<li><span style=\"font-family: georgia, palatino, serif\">Political Principals and Senior Budget Administrators charged with the allocation of fiscal resources, to ensure a more effective funding allocation to revenue authorities that will in turn result in an exponential and positive return on investment,<\/span><\/li>\n<li><span style=\"font-family: georgia, palatino, serif\">Legal, Tax and Financial Professionals who often shape the advisory and intermediary landscape in a manner that erodes tax morality and compliance, and<\/span><\/li>\n<li><span style=\"font-family: georgia, palatino, serif\">The Media, to be more balanced in shaping the national narratives regarding fiscal responsibility and tax morality, whilst holding elected officials accountable for the delivery of social goods and services.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-family: georgia, palatino, serif\">Whatever we may feel about tax, it is still the main source of revenue for governments around the world to finance social programmes and create enabling infrastructure that secures the material and emotional well-being of citizens. These programmes affect particularly the most vulnerable among us who cannot insure themselves from man-made or international disasters (such as we\u2019ve seen during the COVID-19 Pandemic), and who cannot afford private goods or services, such as healthcare, education, housing, nutrition, etc. Poor people have no choice but to look to government for these services, and tax revenues makes this possible. I am therefore a strong advocate for broader stakeholder engagement with the important work of the NTO, hence I welcome the engagement with the media over the next few days.\u00a0<\/span><\/p>\n<p><span style=\"font-family: georgia, palatino, serif\">The conference theme, digitalisation of tax administrations and contemporary issues, has evolved in an exponential and disruptive manner in the recent past. In many ways, COVID-19 has accelerated to need for rapid modernisation of our work.<\/span><\/p>\n<p><span style=\"font-family: georgia, palatino, serif\">When I joined SARS \u2013 for the second time &#8211; in 2019, it was at a challenging time. The organisation had become a victim of state capture. It had been repurposed to serve the corrupt intention of a self-serving leadership and their narrow interests. Governance and Integrity had deliberately been destroyed and well-established institutional arrangements were dismantled. Mission critical technology modernisation was disrupted.\u00a0 As a result, internal trust and morale between employees and leadership had eroded. Competent professionals left many organisations. Public trust dropped to well below 50%. Revenue performance and tax compliance declined significantly.<\/span><\/p>\n<p><span style=\"font-family: georgia, palatino, serif\">We were confronted with a clear mandate. To turn around SARS and this time rebuild it into a SMART Modern Tax Administration that could be trusted and admired. We had to restore institutional capability and integrity to deliver on its mandate, and improve overall performance. No sooner had we started, when we were confronted with the COVID-19 pandemic that brought its own set of devastating challenges. However, COVID-19 inadvertently took us to the drawing board to think from first principles, and very quickly accelerated our response towards reprioritising our technology investment to enable our employees to work during the hard lock-down and to allow taxpayers to continue to fulfil their tax obligations. We used the pandemic to our advantage and have enjoyed remarkable progress on our modernisation journey, but we still have much to do.<\/span><\/p>\n<p><span style=\"font-family: georgia, palatino, serif\">\u2019SARS\u2019 experience is not unique, this is evidenced in the OECD\u2019s Tax Administration 2022 publication which \u201cshows how the pandemic accelerated the shift to digital services with an almost 30% increase in digital taxpayer contacts in 2020. At the time of publishing of the report, digital channels were dominating interactions with taxpayers, with around 1.3 billion contacts via online taxpayer accounts, and more than 30 million contacts via chatbots. This is a rapid shift from the pre-pandemic models which may have depended on channels such as post or in-person visits to the tax office. These new channels are often employing behavioural insights which are becoming more widely used in all aspects of a tax administration\u2019s work.\u201d<\/span><\/p>\n<p><span style=\"font-family: georgia, palatino, serif\">I will share some of SARS\u2019 experience during this conference.<\/span><\/p>\n<p><span style=\"font-family: georgia, palatino, serif\">Ladies and gentlemen,<\/span><\/p>\n<p><span style=\"font-family: georgia, palatino, serif\">The progress reported is impressive, but it would not have been possible in the absence of a common vision, clearly defined strategic objectives and measurable results. Most commentators agree that the most crucial elements to the digital transformation journey are:<\/span><\/p>\n<ul>\n<li><span style=\"font-family: georgia, palatino, serif\">Leadership in terms of the centrality of providing a clear digital transformation strategy, organisational culture, and change management for internal resistance;<\/span><\/li>\n<li><span style=\"font-family: georgia, palatino, serif\">Building digital skills and workforce agility;<\/span><\/li>\n<li><span style=\"font-family: georgia, palatino, serif\">Appropriate budget allocation and funding certainty;\u00a0<\/span><\/li>\n<li><span style=\"font-family: georgia, palatino, serif\">IT security and dealing with the challenges posed by legacy issues; and<\/span><\/li>\n<li><span style=\"font-family: georgia, palatino, serif\">Lastly, to me personally, in the context of driving voluntary tax compliance \u2013 addressing the customer needs, expectations and meaningful service experiences.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-family: georgia, palatino, serif\">I will deal with most of these elements over the next couple of days.<\/span><\/p>\n<p><span style=\"font-family: georgia, palatino, serif\">However, I want to pause here and focus on one element as a critical enabler of the digitalisation journey &#8211; and that relates to funding. Before state capture, SARS was a leader in digital modernisation for many years. However, partly due to financial constraints, but also a short-term approach, budgets were then frozen for a number of years and SARS fell behind in driving technological innovation. We have now managed to restore some additional funds to continue our modernisation, but we are still substantially underfunded to move at the necessary speed in an environment that is changing exponentially, business models are being disrupted, and tax crime proliferating at an alarming rate.\u00a0 I am sure many of you can report the same.<\/span><\/p>\n<p><span style=\"font-family: georgia, palatino, serif\">The challenge now is that we not only have to play catch-up after many years of under-investment, but we have to accelerate modernisation simply to remain relevant. We are at a point where we can again focus on innovation. The important lesson here is that the digitalisation journey is not a finite project, but a new way of being. It is an ongoing journey. Once you suspend funding, the end result will always be the suspension of innovation and regression against the progress of other administrations.<\/span><\/p>\n<p><span style=\"font-family: georgia, palatino, serif\">This goes against the intrinsic value of digitalisation in improving tax compliance and detecting tax non-compliance. As more financial transactions are taking place digitally, more 3<sup>rd<\/sup> party data sources are shared with tax administrations, and central bank digital currencies are emerging, the importance of digitalisation and consequently the use of data science, and artificial intelligence have become central to revenue collection, compliance and trade facilitation. So, in short, whenever budget cuts are required, National Treasuries \u2013 Budget Offices are advised to avoid across the board cuts and ensure a more prudent approach to invest to build enabling and productive economic capacity, create employment, and thus expand the tax base. This secures fiscal integrity and sovereignty in the long run. Tax Administrations should be excluded from across-the-board austerity measures. The investment in digitalisation should not be disrupted.\u00a0 The cost of recovery is simply too high in every respect.<\/span><\/p>\n<p><span style=\"font-family: georgia, palatino, serif\">Going digital through enabling technologies and increased reliance on data science and artificial intelligence has had global benefits worth reflecting on for a moment:<\/span><\/p>\n<ul>\n<li><span style=\"font-family: georgia, palatino, serif\">Making it easier for compliance. It takes you approx. 5 seconds to unlock your phone using facial recognition. Today, you are able to receive your tax assessment within 5 seconds or less at the click of a button (at SARS we issue 94% of assessments in 5 seconds and we auto-assess almost 4 million taxpayers. \u00a0This involves the act of computing a multiplicity of data points and algorithms in a matter of seconds through the power of big data and enabling technologies (such as machine learning &amp; artificial intelligence as well as cloud computing).<\/span><\/li>\n<li><span style=\"font-family: georgia, palatino, serif\">Exponential growths in the expanded and increased use of data \u2013 for example, Automatic Exchange of Information (AEOI) has doubled since its inception, from some 47 million accounts in 2018 with assets totalling of EUR5 trillion, compared to the recent exchange period that had 111 million accounts in 2021 with assets totalling EUR11 trillion.<\/span><\/li>\n<li><span style=\"font-family: georgia, palatino, serif\">Evident support for digital transformation \u2013 Tax Administration&#8217;s Investment into ICT (Information &amp; Communication Technology) has doubled since 2018,\u00a0 representing only approx. 2% of Tax Administration budgets to now being 4% in 2020.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-family: georgia, palatino, serif\">I wish to turn to what I believe is a matter for urgent attention. The question of a higher purpose and common objective for members of the NTO, which has just increased to 10 regional organisations representing the interests of its respective constituent tax administrations and\/or revenue authorities. I frame this as my challenge to you.<\/span><\/p>\n<p><span style=\"font-family: georgia, palatino, serif\">In the context of digital transformation and modernisation journeys, a really transformative common purpose objective would be to leverage efforts towards a single digital identity. Countries like Chile, Sweden and Norway have used a single unique digital identity for the whole of government as well as subscription to the financial services. This has enabled them not only to serve citizens better, but also for more effective detection of tax and economic crime, and law enforcement. Generally, its proving to be a defining enabler towards improved delivery of social services and greater social cohesion.\u00a0 The achievement of a single digital identity is well beyond the scope of tax administration, but I believe we can lead the way given our dependence on it for more effective administration, though it will require strong political will and competent institutional leadership. The advocacy role, convincing,\u00a0 influencing, and global networking of the NTO, positions it well to set a single digital identity as a global and clear common objective for its members.<\/span><\/p>\n<p><span style=\"font-family: georgia, palatino, serif\">Heads of Tax and Revenue Authorities like myself have to challenge their leadership teams to think differently and to challenge conventional thinking. So, in this vein, I want to challenge all the members of the NTO to become vocal advocates and promoters of a single digital identity.\u00a0<\/span><\/p>\n<p><span style=\"font-family: georgia, palatino, serif\">For more information, contact <a href=\"mailto:SarsMedia@sars.gov.za\">SarsMedia@sars.gov.za<\/a><\/span><\/p>\n<p>&nbsp;<\/p>\n<p>Source: SARS Tariffs<br \/>\n<a href=\"https:\/\/www.sars.gov.za\/latest-news\/digitalisation-of-tax-administrations-and-contemporary-issues\/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=digitalisation-of-tax-administrations-and-contemporary-issues\" target=\"_blank\" rel=\"noopener\">Digitalisation of Tax Administrations and contemporary issues<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>5 September 2023 &#8211; Find below the keynote address by Mr Edward Kieswetter, Commissioner for the South African Revenue Service (SARS) and vice-chairperson of the African Tax Administration Forum (ATAF), on the occasion of the 2nd Network of Tax Organisations (NTO) technical conference under the theme &#8220;Digitalisation of Tax Administrations and contemporary issues\u201d on 5 &hellip;<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[1],"tags":[24],"class_list":["post-1834","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-shipping"],"jetpack_publicize_connections":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.9 - 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