On September 5, 2023, Edward Kieswetter, Commissioner for the South African Revenue Service (SARS) and Vice-Chairperson of the African Tax Administration Forum (ATAF), delivered a keynote address at the 2nd Network of Tax Organizations (NTO) Technical Conference in Cape Town.
The theme of the conference, “Digitalisation of Tax Administrations and Contemporary Issues,” set the stage for a deep dive into the evolving landscape of tax administration in our rapidly changing world.
A Call for Broader Engagement
Kieswetter began his address by emphasising the importance of engaging all stakeholders in the tax ecosystem. He highlighted the need to involve policymakers, national treasuries, political principals, legal, tax, and financial professionals, and the media in discussions surrounding tax.
Tax, he argued, remains the primary source of revenue for governments worldwide, enabling them to finance essential social programs and infrastructure, particularly benefiting vulnerable populations who rely on public services.
Kieswetter emphasised the role of broader stakeholder engagement in advancing the NTO’s mission.
The Digitalisation Imperative
The Commissioner then turned his attention to the conference’s central theme: the digitalisation of tax administrations.
He noted how COVID-19 had acted as a catalyst, accelerating the need for modernisation in tax administrations globally.
Upon his return to SARS in 2019, he faced the formidable task of rebuilding an organisation that had suffered from state capture. Governance and integrity had been eroded, leading to a decline in revenue performance and tax compliance.
However, the COVID-19 pandemic prompted a re-evaluation of SARS’s technological capabilities, leading to rapid modernisation efforts.
Kieswetter shared that SARS’ experience was not unique, as evidenced by the OECD’s Tax Administration 2022 publication, which showed a significant increase in digital taxpayer contacts during the pandemic.
The adoption of digital channels and behavioural insights had transformed the way tax administrations interacted with taxpayers, creating a new paradigm.
Critical Elements of Digital Transformation
The Commissioner highlighted the critical elements of successful digital transformation in tax administrations, which include:
- Leadership: A clear digital transformation strategy, a supportive organizational culture, and effective change management to address internal resistance.
- Digital Skills: Developing a skilled and agile workforce capable of navigating the digital landscape.
- Budget Allocation: Ensuring adequate funding and financial certainty to drive digital initiatives.
- IT Security: Managing legacy issues and addressing cybersecurity challenges.
- Customer-Centric Approach: Meeting customer needs and expectations to enhance voluntary tax compliance.
Funding as a Critical Enabler
Kieswetter emphasised the importance of adequate funding for the digitalisation journey.
He pointed out that budget freezes had hindered SARS’s technological innovation in the past.
To remain relevant and accelerate modernisation, tax administrations must prioritize funding for innovation. The digitalisation journey is ongoing, and any suspension of funding results in a suspension of innovation and regression compared to other administrations.
The Global Benefits of Digital Transformation
The Commissioner outlined the global benefits of digital transformation in tax administration, such as streamlined compliance processes, exponential growth in data usage, and increased investment in Information & Communication Technology (ICT).
A Common Objective for the NTO
In closing, Kieswetter challenged the NTO members to adopt a transformative common objective: the pursuit of a single digital identity.
He cited examples of countries like Chile, Sweden, and Norway that have successfully implemented single digital identities, enabling better service delivery, crime detection, and law enforcement.
While acknowledging that achieving this goal is a significant undertaking, he stressed the NTO’s unique position to advocate for a global commitment to a single digital identity.
Finally, Kieswetter’s keynote address at the 2nd NTO Technical Conference highlighted the pivotal role of digitalisation in modern tax administrations.
It underscored the need for broader stakeholder engagement, adequate funding, and a shared objective to navigate the digital frontier successfully. As tax administrations worldwide continue their digital transformation journeys, the NTO’s role in shaping the future of tax administration remains crucial.
