The SA Revenue Service (Sars) has refused to divulge the composition, size and expertise of its new High Wealth Individual Taxpayer Segment (HWI) unit dedicated to focus on the rich, as this will expose its capacity.
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But spokesperson Siphithi Sibeko said the unit, which has started issuing “welcome” letters to its target group, was made up of high calibre people with skills ranging from special investigations, data capturing, auditing and analysis.
He said the unit would benefit from Sars’ massive recruitment drive, which yielded 88,000 applications, including 7,946 applications from external graduates and 755 chartered accountants out of the total number of applications.
“Currently there are 1,000 high calibre individuals in the unit but we want more specialist expertise because the unit will deal with individuals with highly complex tax arrangements,” Sibeko said.
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He said the unit would work on Sars’ premise that taxpayers are generally honest, but the rich tend to pay teams of lawyers and consultants to structure their tax affairs, which he said might lead to temptation.
Millionaires pay less tax than you and I
“The unit looks at tax affairs not from the guilty point of view. But you find a situation where an individual owns three luxury sports cars and lives in massive houses but they declare R300,000 as their income. They pay less tax than you and I. That is where the unit comes in,” Sibeko said.
He said SA had the most millionaires in Africa, with about 38,400 individuals with a net asset value of more than $1 million (about R14.7 million).
Sibeko said each target taxpayer would be assigned a dedicated manager.
Jean du Toit, head of tax technical, at Tax Consulting South Africa, said a good starting point for the unit is that retired Judge Dennis Davies is involved.
“That is a good start. The unit needs people with experience in auditing and who understand tax law to unravel the complex tax structures of wealthy individuals. These are people with resources to get tax attorneys. So, you need people who understand the law, with practical experience in uncovering certain tax stratagems,” he said.
Du Toit said the unit would most probably use data analytics and artificial intelligence to sniff out tax evaders.
According to tax attorney Jean-Louis Nel, in 2017 when Sars started investigating these high net wealth individuals, the taxman was able to recover an additional R184 million.