SA Revenue Services (Sars) has announced that Judge Dennis Davis – a former judge and chairperson of the Davis Tax Committee (DTC) – has joined its team “on a more permanent basis” to help round up high net worth individuals and make sure they are paying their fair share of tax.
This comes after a wave of resignations from Sars that has weakened its skills base, particularly when it comes to the complex schemes some high net worth individuals have employed to reduce or escape their tax liability.
Judge Davis will assist Sars in the implementation of its tax policy framework and its objectives of inclusive growth, employment, development and fiscal sustainability.
“It is no secret that wealthy South Africans are the focal point in SARS’ efforts to close the tax gap. SARS has progressively implemented specific steps in pursuing this objective, including the use of information from other jurisdictions, third party data and the promise of lifestyle audits. But the latest and probably the most insightful is having Judge Dennis Davis join their team,” says Jean du Toit, head of Tax Technical at Tax Consulting SA.
One of Davis’ main tasks will be to target the wealthy, according to Sars. He comes with vast knowledge and insight into SA’s tax structure, and its deficiencies.
“The DTC, in its five-year tenure, spent countless hours researching and consulting with academics, tax professionals, government departments and international experts to come to grips with the South African tax system. In its endeavours, the DTC published 25 reports dealing with almost every facet of taxation in our country,” adds du Toit.
Why should his appointment set alarm bells ringing among wealthy South Africans?
“While Judge Davis will likely assist in the implementation of a broad range of recommendations of the DTC, his focus, too, will be directed at the wealthy. He has been vocal about wealthy taxpayers who under declare their income and has advocated strongly for lifestyle audits. Based on his comments on the matter, he has already identified his first subjects for investigation.
“While Sars has been open about the measures it will use to pursue wealthy taxpayers, there are still those who will question SARS’ capacity and guile to do so. They may be of the belief that they are smarter than SARS, but are they smarter than Judge Dennis Davis?
“From Sars’ perspective, the board is set, and the pieces are moving. Taxpayers should heed the Commissioner’s call to come and speak to them on friendly terms through the Voluntary Disclosure Programme, before they speak to you,” concludes du Toit.