By Phenyo Selinda
Johannesburg, 16 July 2024 – The South African Revenue Services (SARS) has made significant strides in this year’s Tax Season, paying out about R10 billion in refunds to at least 1.6 million taxpayers who were auto-assessed. SARS Commissioner Edward Kieswetter shared this information during a media briefing on Tuesday.
Auto-Assessments and Efficient Refund Processing
In the first two weeks of July, SARS successfully auto-assessed at least five million taxpayers. Kieswetter explained, “We completed these annual returns and tax assessments while, simultaneously, running each assessment outcome through our compliance risk and tax fraud detection capability. All this is possible because of the investment that we have been able to make in increasing and expanding the use of third-party data in the past few years.”
Thanks to these advancements, SARS can process over 90% of refunds for taxpayers not selected for verification within 72 hours using fraud risk detection AI. High-risk taxpayers, suspected of potential fraudulent or impermissible refunds, are directed for further verification.
Harnessing Third-Party Data and Advanced Technology
To ensure the accuracy of auto-assessments, SARS harvested nearly 150 million third-party data records. This information was processed using artificial intelligence and enhanced machine learning algorithms. “We are extremely reliant on employers, banks, and other third-party information providers to provide us with accurate data. The integrity of the entire value chain of data is important,” Kieswetter noted.
The Commissioner highlighted the efforts made to improve the accuracy of bulk data submissions with large institutions and entities. Partnerships with third-party data providers are crucial for a seamless experience for taxpayers. Inaccurate or late data can cause downstream difficulties and unnecessary delays and frustrations.
Sophisticated Data Processing for Fraud Detection
SARS employs sophisticated graph database technology to analyse billions of rows of data, creating a single entity view of a taxpayer. This approach enables accurate assessment outcomes and effective risk detection using artificial intelligence methodologies. Kieswetter pointed out, “SARS uses sophisticated graph database technology to decipher billions and billions of rows of data that allows us to compose a single entity view of a taxpayer.”
The AI tool used by SARS has proven to be a robust fraud detection mechanism, saving the fiscus billions of Rands in fraudulent refunds. “Last year alone, this fraud detection capability prevented almost R100 billion of impermissible PIT and VAT [Personal Income Tax and Value Added Tax] refunds from being paid out and lost to the fiscus,” Kieswetter said.
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