SARS Pays R10 Billion In Refunds To 1.6 Million Taxpayers Before Tax Season

The South African Revenue Service (SARS) refunded approximately R10 billion to at least 1.6 million taxpayers who were automatically assessed before this year's Tax Season.

SARS Commissioner Edward Kieswetter shared this update during a media briefing on Tuesday, adding that within the first two weeks of July, SARS automatically assessed around five million taxpayers.

"We completed these annual returns and tax assessments while, simultaneously, running each assessment outcome through our compliance risk and tax fraud detection capability," Kieswetter said, SA News reported.

The revenue service can process refunds for over 90% of taxpayers not flagged for verification within 72 hours using AI for fraud risk detection. Taxpayers deemed high risk undergo additional verification to prevent fraudulent or unauthorized refunds, as per Kieswetter.

To accurately conduct auto-assessments, SARS gathered nearly 150 million records of third-party data, which underwent analysis using artificial intelligence and advanced machine learning algorithms.

Kieswetter emphasized SARS' dependence on accurate data from employers, banks and other third-party sources. Ensuring the integrity of this data chain has been a priority with efforts made over the past year to improve the accuracy of bulk data submissions through collaborations with major institutions and entities.

"We appreciate the partnerships with all third-party data providers to enable a seamless experience for taxpayers. Inaccurate data, or late data, causes downstream difficulties and unnecessary delays and frustrations for taxpayers," the SARS Commissioner said.

He added, "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 and this, in turn, allows us to produce an assessment outcome as well as conducting the necessary risk detection through the artificial intelligence methodologies."

The AI tool employed by the revenue service has saved the government billions of Rands by detecting fraud. Last year, this fraud detection system stopped nearly R100 billion in unauthorized refunds for Personal Income Tax and Value Added Tax (VAT), Kieswetter said.

Earlier this year, SARS disclosed it had collected R2.155 trillion in gross tax revenue for the 2023-24 financial year.

Total tax revenue increased by R54.2 billion (3.2%) versus the 2022/23 fiscal year, driven by personal income taxes of R49.5 billion (8.2% year on year or y/y) on the back of higher than estimated compensation of employees, as well as higher domestic VAT of R39.3 billion (8.1% y/y).