big business the mainstay of taxation  
30 September 2008

Between 60% and 70% of revenue was collected from large businesses every year, he said, speaking at the Inter-American Centre of Tax Administration Technical Conference, hosted by SARS in Sandton yesterday. SA did not have a medium class of business as existed in some jurisdictions, Kieswetter said.

For the 2006-07 financial year, SA’s large business centre (which caters for such organisations) collected R150,3bn, exceeding its revised revenue target, according to the SARS annual report. Since its establishment in September 2004, the large business centre has grown from about 9100 to 20900 taxpayers as at March 31 last year. Kieswetter said that the tax register had grown 10,5% over the past 10 years. There were 7,2-million taxpayers registered for income tax, and 8,2-million taxpayers registered for value added tax (VAT) and pay-as-you-earn (PAYE) tax.

SARS had recently introduced a customised prepared tax return for individuals, which was intended to make filing of returns simpler. SARS was moving to a system similar to that of other developed countries, where the onus was on taxpayers to assess their own tax liabilities.  The customised, “pre-populated” tax return would contain information from third parties, such as a taxpayer’s employer, bank and insurance company.

Ricardo Escobar, commissioner of the Internal Revenue Service of Chile, said that the use of a pre-populated tax return was introduced into the country about five years ago. “Last tax season we provided 1,6-million taxpayers with prepared tax returns. About 1,3-million taxpayers filed their tax returns as filled out by the tax administration.”  Escobar said that as the years had gone by, taxpayers had realised that their obligations to the revenue service were not as difficult as once thought. They had cut down on using tax advisers.  According to a recent study carried out by the Organisation for Economic Co-operation and Development , for the 44 major revenue bodies, the major tax types that they administer include direct tax, VAT, excises, property taxes, estate duties, motor vehicle taxes, and social funds. Escobar said that tax authorities did more than simply collect taxes. “They also carry out nonfiscal functions.”

Sanchia Temkin, www.businessday.co.za