Presentation to the Standing Committee on Finance

19 October 2011

Slide 2: SARS collected a record R674 billion in 20 10/11, continuing its high-growth trajectory

Total tax revenue collectedR billion

674

599625

573

496

417

+11.8%, p.aSARS has

achieved 417

355303

252220201184165

147127113

282

1994

/95

1995

/96

1996

/97

1997

/98

1998

/99

1999

/00

2000

/01

2001

/02

2002

/03

2003

/04

2004

/05

2005

/06

2006

/07

2007

/08

2008

/09

2009

/10

2010

/11

1994

/95

1995

/96

1996

/97

1997

/98

1998

/99

1999

/00

2000

/01

2001

/02

2002

/03

2003

/04

2004

/05

2005

/06

2006

/07

2007

/08

2008

/09

2009

/10

2010

/11

double-digit

revenue

collection

growth since

1994

Source: SARS 2010/11 Annual report page 11 and SARS internal data 2

Slide 3: Cost of revenue collection remains stable

+18

+7

Cost of revenue collection

674

599625

573600

700

1.0

1.2

Tax revenue

Cost to tax revenue ratio

R billion %

496

417

0

100

200

300

400

500

0.0

0.2

0.4

0.6

0.8

2010/112009/102008/092007/082006/072005/06

Source: SARS 2010/11 Annual report page 18 3

Slide 4: The growth rate of debt due to SARS has be en reduced

79

61

86

+30%

+9%

+18

Debt dueR billion

2010/112009/102008/9Source: SARS 2010/11 Annual report page 24 4

Slide 5: Compliance and Enforcement achievements

81% of individual taxpayers filed their tax returns on-time

11% reduction in outstanding returns compared to previous FY

R17.7 billion rand recovered from the debt book

48% growth in the overall tax and trader register

Strategic plan

measures (pg 50-58)

~80 000 audits conducted; ~6 500 investigative audits completed

83% of investigative audits conducted by SARS were successful and netted R3.9 billion in audit yield (cash collected on raised assessments and reduced refunds)125 000 taxpayers issued penalties for outstanding returns; additional R191 million collected in revenue from these penalties

23 580 seizures completed with a protected value of R994 million

R765 million collected through post-clearance audits

Other compliance

and enforce-

mentindicators (pg 20-27)

Source: SARS 2010/11 Annual report pages 20-27 & 50 -58 5

~80 000 audits conducted; ~6 500 investigative audits completed

65% success rate in litigation cases

Slide 5: Service achievements

85% first contact resolution in contact centres

15 days average turnaround time for escalations

79% of entities operating from SACU countries submit declarations electronically

>6 million e-Filing users – 12 times greater than 5 years ago

Strategic plan

measures (pg 50-58)

3 million calls handled by the call centre during Tax Season

186 000 (4.2%) of returns submitted on paper – down from 345 000 (8%) last year

1.7 million returns (38%) submitted through branches

Other service

indicators (pg 20-27)

Source: SARS 2010/11 Annual report pages 20-27 & 50 -58

2.7 million returns assessed within 24 hours – 18% improvement

79% of refunds paid within 48 hours

6

Slide 7: Human Capital levels and Employment Equity ratios have remained stable

32 32 31White

100% = 15,296100% = 15,263100% = 15,307

Human Capital and Employment Equity%

Women ratio = 61%

PDI in mgmt> 60%

11 11 11

51 51 52

Indian

Coloured

2010/2011

6

2009/10

6

2008/09

6

African

Disability rate = 2.13%

= 61%

Women in mgmt~ 45%

Source: SARS 2010/11 Annual report pages 33-35 7

Slide 8: SARS continues to exercise the utmost prud ence when utilising taxpayer funds

Lease costRm

Travel costsRm

PIC

DPW

462

412 2514

3 12

Domestic S&T

International travel

97

79

47

125

104

x% Cost as a % of total expenditure

# of

properties

144

# of

properties

163

SARS adopts a lease policy to adapt quickly to taxpayer demographics (commercial centres, public transport routes, etc.)

SARS has strict controls in place to manage travel costs (e.g. use of low-cost airlines, discounted rates at hotels, strict employee acquittal rules)

2010/11

Private Leases

423

2009/10

396

Domestic air travel

Domestic accommodation

2010/112009/10

34

47

28

36

1.3%1%1.1%7%5%

Source: SARS internal data 8

144163

Slide 9: Areas where we did not meet our goals for 2010/11

92% of our leadership positions filled (against a target of 95%)

The roll-out of the new operating model resulted in a few leadership positions not being filled

99.3% of our employees placed on career model (against a target of 100%)

Newly appointed employees have not been placed as no career data is available for them yet.

Achievement against target Commentary on performance

them yet.

49.5 % employee engagement achieved in 2010/11 (against a target of 55%)

Employee engagement has shown an improvement over 2009/10 level (47%)

Implemented the Preferred Trader segment (along with Large Business and Standard Individuals) instead of the Medium Business segment

There was a need to increase compliance and modernise the Customs environment

Source: SARS Annual report pages 52-58 9

Slide 10: Global and local collaboration with other stakeholdersStakeholder Description of collaborative efforts

ATAF

OECD

WCO

SARS continues to play leading roles in many international multi-lateral tax and customs forums like the OECD and the WCO, including seconding key leaders into these organisations

SARS holds the Chairperson’s position and the position of the interim secretariat of ATAF

WCO

DHA

SAPS

SSA

SANDF

SARS continues to lend support to fellow government agencies to build world class systems

SARS has formed strategic relationships with a number of Intelligence and Defence force agencies to ensure continuous growth. This has enabled the initiation to form the Inter Agency Clearance Forum (IACF) to enhance the coordination and cooperation amongst the various agencies.

organisations

Source: SARS internal data 10

Thank youThank you

11

SA’s cost of revenue collection compares favourably to other countries…

1.02

0.80

0.58

0.97

0.79

Australia

Spain

Singapore

Germany

New Zealand

Comparison of aggregate administrative costs to net revenue collections, 2009%

SA’s cost of

revenue collection

is in line with

1.14

1.44

1.37

1.33

1.20

1.11

1.11

1.08

1.02

1.14

Portugal

Bulgaria

Canada

Italy

Argentina

UK

South Africa

Netherlands

Ireland

Australia is in line with

international

norms and

developed

countries (e.g.

UK, Netherlands)

12