On November 30th the South African Revenue Service (SARS) released a statement with final outcomes of the 2011 tax season, reporting that a greater number of tax returns were processed than in any previous year.

According to the statement, 4.86 million individual tax returns were received during the tax filing season between July 1st and November 25th, with the total number of individuals who filed their tax returns is a 23 percent increase compared to the same period in 2010.

SARS attributes the increasing number of submitted tax returns to an efficient push for taxpayers to embrace electronic filing technology. In 2011 approximately 99.15 percent of all returns were submitted online or through a SARS branch office which provides computer access. The switch to electronic filing has allowed SARS to process 98.36 percent of all tax returns within 24 hours of filing, and pay 85 percent of all refunds within 72 hours.

The increasing use of technology has also meant that SARS has had access to greater amounts of readily searchable and compiled taxpayer data, significantly increasing the Service’s enforcement capabilities. Through the use of sophisticated data matching and threat detection technologies the SARS issued 5.2 million penalty notices to 637 965 taxpayers over the course of the 2011 tax season.

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Throughout last week debates have arisen in South Africa over the potential to instate a new tax on the country’s wealthiest citizens. The issue of wealth taxes arose after US president Barack Obama suggested that such a measure should be instated in the USA. However, tax experts in South Africa are arguing that their national situation is different to the USA, and a wealth tax would not be a productive idea.

According to Eustace Davie, council member of the Free Market Foundation, if a wealth tax was instated in South Africa it would only serve to drive skilled workers and high net worth individuals out of the country. His comments were supported by Ernie Lai King, director and head of tax at the multinational legal practice Norton Rose in South Africa, who said that skilled workers were scarce in South Africa, and extra tax burdens would encourage them to move to a different country. Ernie Lai King did concede that wealth tax measures may look like a good solution for alleviating national poverty, but he claimed that instating the tax is short sighted, ultimately slowing the country’s economic development. He summarized his points, saying, “… one cannot make a poor man rich by making a rich man poor. Poverty cannot be solved by continually increasing taxes.”

The argument against a wealth tax also received support from Vedika Andhee, tax director at Ernst & Young, who said that the situation in the US is different to that in South Africa, and imposing heavier taxes on local millionaires would not benefit the country as it would in America. Instead, Vedika Andhee suggested that the government investigates means to cut down budgetary spending and improve the national welfare system.

According to data made available by the South African Revenue Service, there are approximately only 2000 taxpayers in South Africa who are considered to be high net worth individuals. Currently the top personal tax rate in South Africa stands at 40 percent, which is considered to be unusually high for an emerging economy.

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In a statement issued on September 20th the South African Revenue Service (SARS) announced that throughout the 2011 tax filing season the Service saw the highest number of early filers since records began, and an unprecedented level of electronic submissions.

According to the statement, it only took 11 weeks for 2 million South African taxpayers to file their returns. Last year, the same number of submissions took 14 weeks to achieve. In total, 2 043 759 returns had been received at the time statement’s release, a 16 percent improvement over the previous year.

SARS Commissioner Oupa Magashula commented on the results saying that SARS is positively influencing the country’s tax compliance culture, and South African taxpayers are now seeing the benefits of complying with their obligations in a timely manner. The Commissioner specifically applauded the effectiveness of SARS’s efforts to encourage taxpayers to utilize online filing methods. So far 98 percent of all filers either used electronic filing or visited a SARS temporary office where they were assisted with an online submission. For the remained of the year SARS will continue with its public education campaigns on electronic filing and tax compliance.

The SARS online filing system, also called eFiling, is touted as a being superior to traditional paper submissions, as it reduces compliance costs for SARS and taxpayers. Wholly electronic submissions allow for a greater level of data checking on tax returns, and help to avoid any processing congestion near the tax season deadlines.

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On July 4th the African Tax Administration Forum (ATAF) issued a statement, saying that three tax authorities on the African continent have now agreed to a higher level of information sharing and cooperation with the Forum in order to fight tax evasion, with a particular emphasis on compliance issues for large multinational corporations.

According to the statement, an agreement for cooperation has been reached between the South African Revenues Service, the Tanzania Revenue Authority, and the Zambia Revenue Authority. During a speech made at the beginning of June, South African Finance Minister Pravin Gordhan explained the need for cooperation between tax authorities in Africa, saying that large multinational firms and international tax planners are repeatedly showing themselves to be “so far ahead of government tax administrators”. In order to address the shortfall in resources, the three tax authorities have also agreed that when conducting a tax audit on a large multinational firm, they will turn to the ATAF for assistance. In case the Forum finds that assistance is needed, it will organize expert counsel from another participating nation, or provide one f its own specialists.

The three tax authorities have also indicated their interest in establishing greater means of sharing information regarding taxpayers. According to tax experts, increased international cooperation in Africa will be particularly effective in fighting tax evasion, as international companies operating on the continent can be prone to engaging in aggressive transfer pricing practices between neighboring countries.

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In a media statement released on June 9th the South African Revenues Service (SARS) revealed that its tax compliance efforts have paid off well throughout the 2011 tax season, with nearly 11 percent more employers filing their mandatory annual tax reconciliations.

According to information released in SARS’s statement, a total of 235 882 employers filed annual reconciliations during the business tax filing season ended June 3rd. The latest results are reported to be the highest level ever recorded in South Africa. In the 2010 tax year only 212 969 employers filed the same reconciliations. The returns provided information on over 14.8 million employees, with all the collected data being used as verification for returns submitted by personal taxpayers. In an effort to compel an even further number of reconciliations to be submitted, the SARS is offering a waiver of the normal 10 percent late-filing penalty to any businesses that immediately attempts to meet their obligations, and has a valid reason for not submitting them on time.

On June 7th the Finance Minister of South Africa Pravin Gordhan made a preliminary indication that the 2011 tax season would be highly successful, attributing the now-announced results to a greater push for compliance by SARS. He stated that the Revenue Service’s new non-compliance penalties were encouraging a greater number of taxpayers to meet their obligations, revealing that over 230 000 penalty notices have been issued by SARS this year. He added that in excess of ZAR 189 million has already been paid in penalties.

Buoyed by its successful year, the government of South Africa is pushing for other nations on the African continent to pursue improved tax administration systems. On June 8th the SARS reported to parliament saying that in the 2011 fiscal year it will spend SAR 8.7 million to run the secretariat of the African Tax Administration Forum, in which it will attempt to aid other African nations in increasing their tax-to-GDP ratio, through improvements in tax administration.

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