The efficiency and transparency of the service provided by the Customs and Revenue Service (CRS) have become major concerns for many South African taxpayers. According to PwC’s latest report, Taxing Times Survey 2024, the pressure on the CRS to improve its services and restore public confidence continues to grow.
South Africa’s tax revenue deficit, announced by Finance Minister Enoch Godongwana during the Medium Term Budget Policy Statement last month, is estimated at R22.3 billion. This is putting even greater pressure on the CRS to optimise its operations and provide a more efficient service.
The PwC report highlights growing dissatisfaction among corporate taxpayers with the CRS’s lengthy turnaround times, slow processing of audits and increasingly aggressive approach to penalties. Audit processes with the SDI are now associated with excessive delays and costly uncertainty for businesses.
Despite the tax agency’s efforts to simplify compliance, the PwC report suggests that audit times continue to exceed reasonable expectations, leaving many taxpayers in a prolonged state of limbo. It is essential that the SDI improves these times to reduce the pressure and costs for businesses.
Another source of frustration for taxpayers is the SDI’s approach to penalties, particularly under-assessment penalties (PSEs), which are imposed when taxpayers are accused of under-reporting their income. According to the report, 44% of respondents consider the SDI to be “aggressive” in its application of PSEs, while 27% describe it as “moderately aggressive”.
It is clear that the SDI must strike a balance between enforcing penalties and promoting tax compliance, in order to restore taxpayer confidence and improve relationships with businesses. Taxpayers must be able to comply with tax rules without fear of excessive penalties.
Finally, the modernisation of SDI services is a crucial aspect of improving the taxpayer experience. While some progress has been made, much more needs to be done to ensure that deadlines are met and that services are accessible and efficient for all taxpayers. It is imperative that SDI continues to invest in technology solutions and improved processes to meet the evolving needs of the South African tax community.