SARS debt collection strategy raises questions

The South African Revenue Service’s (SARS’s) appointment of eight agencies to recover billions of rand in outstanding taxes could be read in two ways: it raised questions about why the tax authority was outsourcing its core function and pointed to complacency among taxpayers, tax experts said.

SARS wants the eight debtcollection agencies to recover as much as possible of the R16.6bn it is owed. Overall, it estimates that more than 2.3-million taxpayers and traders owe just under R150bn.

SARS appointed CSS Credit Solution Services, ITC Business Administrators, Medaco Capital Services, New Integrated Credit Solutions, Norman Bissett & Associates Group, Revenue Consulting, Transaction Capital Recoveries and Van De Venter Mojapelo its debt collectors.

Kyle Mandy, head of tax at PwC, said: “You do question why SARS is outsourcing its core functions.” He believed this was to do with tax complacency.

“We all remember what happened last time when taxpayers were being harassed by these collectors,” Mandy said.

SARS’s Sicelo Mkosi said: “The objective is to boost revenue collection by outsourcing the recovery of older and relatively small amounts.”

The last time SARS outsourced its debt collection there was limited success. In 2016, SARS appointed CSS Credit Solutions, NDS Credit Management and Trifecta Capital for six months to collect a portion of its R100bn debt book.

The SARS act allows the revenue service to do all that is “necessary or expedient” to perform its functions properly.

DA MP Alf Lees said: “SARS has the collection capacity. It is bizarre that once again SARS is embarking on external debt collectors after abandoning the idea two years ago.”

Keith Engel, CEO of the South African Institute of Tax Professionals, said procuring the services of debt collectors was contentious because of questions about the accuracy of SARS’s debtors’ book.