On 12 October 2021, the South African Revenue Services (SARS) launched a survey aimed at certain taxpayers and traders. The stated purpose of the survey is to measure whether SARS’ guidance on tax compliance is clear and certain in its interpretation.
Thomas Lobban
Legal Manager, Cross-Border Tax
LLB, LLM (Tax Law), GTP (SA)
It contains 59 questions, with most being multiple choice and some requiring elaboration. With a deadline set for 2 November 2021, many South Africans can still expect to find this survey curious and be unsure of whether they should make they should ignore the email.
The survey asks pertinent questions to test understanding of various tax types and taxpayer obligations, all the way to the perceived areas of most importance for government spending, as well as the Voluntary Disclosure Programme (VDP) process. We found the length, depth and mix of questions curious, as this is much more than what the naming suggests.
However, it is well known that compliance amongst South African taxpayers is a problematic issue. A large component of this non-compliance is among traders, especially those involved in online trading platforms, such as Robinhood, eToro and similar applications, not to mention those in the crypto assets.
Therefore, it makes sense that SARS has published a survey to gauge the sentiments of taxpayers and particularly traders to see if they are satisfied with the available guidance provided to aid them in meeting their obligations.
This is nevertheless a new and interesting SARS approach, which warrants a deeper analysis.
The Focus Group Approach
In the media industry, production studios run their content ideas past focus groups who give representative feedback, usually in the form of a survey. This allows the studio to cater to the different audiences that may view or listen to their content. Market research is crucial for understanding the different views and experiences among one’s target audience. Failure to consider this balanced feedback could be detrimental to the success of the project.
It is doubtful whether SARS would have followed this approach. Taxpayers who are well informed and compliant, will perhaps complete the survey, being in a mood of civic duty after election day and with the 2nd November 2021 deadline. But will those who are unclear or even blatantly non-compliant complete the survey? These are some doubts on sample selection and validity of the results, taken the participation pool.
Should a Revenue Authority Survey?
On the face of it, the SARS survey makes sense. However, this seems to unravel the more one thinks of the logic behind the survey. What is the exact intention of the survey? If SARS is asking taxpayers whether their guidance is clear enough, it means that concerns have been raised in this regard. Where this was only aimed at traders, why have many of our crypto and other trading clients not received this questionnaire, whilst other taxpayers with no trading whatsoever, were forwarded the questionnaire for completion?
Seeking Clarity of Purpose
Obviously, the issues around the clarity of taxpayers’ obligations and compliance requirements are on SARS’ radar. However, the way in which SARS is seeking to understand these issues raises many questions. It has issued a voluntary survey to determine if taxpayers understand their obligations, but the survey cannot be as simple as dismissed.
SARS’ Genius Move?
A taxpayer who has not declared their crypto or other trading income, is otherwise non-compliant, or suspects that they may be, will not likely participate in such a survey. The survey even opens by issuing a unique identifier code, which would not give much comfort to those individuals who embrace anonymity. No taxpayer who is unsure of their compliance will invite unwanted attention from SARS.
It therefore seems that the survey cannot be expected to give accurate feedback on whether all taxpayers and traders are satisfied with the clarity and certainty of the guidance from SARS. Surely the taxpayers who take the time to complete all 59 questions, are already sure of their compliance – and incredibly patient.
Perhaps the thought process underpinning the survey goes much deeper. There is the possibility that the survey is another fact-finding expedition to expand on SARS’ data collection efforts and audit selection samples. Why the special identifier code if SARS will not take interest in those taxpayers who received a request, but politely declined to participate in the voluntary survey?
Either way, this will almost certainly create an echo chamber situation, with the feedback SARS receives being heavily eschewed by taxpayers who are, to their own knowledge, already tax compliant. That does not actually help those unaware of or uncertain about their tax compliance status.
It would be interesting to see whether they share the outcomes of this survey, but one can always be pleasantly surprised with a progressive Commissioner of Taxes. Or perhaps SARS will revert to the proven concept that a well placed deep-dive tax audit and followed by well publicized court case, is the best medicine for taxpayer education.
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