By Jean du Toit, head of Tax Technical, Tax Consulting SA
In a further effort to enhance its enforcement on a global scale, SARS announced on 6 July that it will join forces with the Criminal Investigation Division of the United States’ Internal Revenue Service (IRS). This partnership will undoubtedly build up SARS’ capacity to trace offshore wealth; the opportunity for SARS to rub shoulders with the IRS is an added, and much needed, bonus.
SARS made its intentions clear in the Budget Speech that a focal point of its enforcement efforts will be the wealthy segment of the tax base. Shortly thereafter, SARS added former Judge Dennis Davis to its ranks to assist with its endeavours. SARS also established the “High Wealth Individual Taxpayers Unit” and now it allied itself with the powers of the IRS to ensure that offshore riches do not go undetected.
This much was confirmed by the Director of the Criminal Investigation Division of the IRS, Guy Ficco, when commenting on the collaboration with SARS – “Taxpayers and tax professionals using offshore and other sophisticated schemes to evade U.S. and South African laws will be uncovered and prosecuted to the full extent of the law.” SARS echoed this sentiment – “SARS welcomes the collaboration with the IRS, particularly with our renewed focus on non-compliant high wealth individuals and offshore holdings.”
It seems that SARS, as we suggested, will take a page from other revenue authorities to ensure that its efforts meet the standard of best global practice and it is clear, now more than ever, that SARS will no longer shut its eyes to offshore structures.
Enrichment of SARS’ talent pool
Perhaps more important for SARS is the fact that this initiative creates an invaluable opportunity to upskill its work force.
When SARS published the results of its recruitment drive, concerns were raised on SARS’ existing resource pool and its ability to transfer the necessary skills to new recruits. It also raised questions if the recruitment drive invited applications from the desired candidates, especially as more than 15,000 applications came from individuals already employed at SARS.
Arguably, these issues were confirmed when SARS announced, also on 6 July 2021, that it entered into a partnership with the South African Institute of Chartered Accountants (SAICA) to help build capacity at SARS, by assisting with its recruitment efforts. Seemingly, SARS is struggling to recruit candidates with the desired qualifications and experience, which again brings us to question the current status within the organisation.
This is why the initiative with the IRS is so important. It appears that SARS is not yet at the point where it will try and recruit internationally but working with and learning from experts within the IRS and other revenue authorities is not a bad consolation prize at this point. In fact, the media release confirmed that the IRS already had a training session with some of SARS’ enforcement officials on offshore tax evasion, which is hugely encouraging.
The ship is turning
There are several obstacles that SARS still need to overcome before it will be back where it needs to be, its lack of resources being in the forefront. But through consistent effort, SARS is effecting positive change across the board and this initiative again demonstrates SARS’ commitment to achieving its vision of building a smart modern institution with integrity that is trusted and admired by all.