The 2024 tax filing season is upon us, and the South African Revenue Service (SARS) is leveraging advanced AI technologies to streamline the tax filing process. These advancements aim to enhance effectiveness, precision, and the overall user experience for taxpayers. Michael Rushby, Managing Director of tax and audit firm Galbraith Rushby, provides an overview of what taxpayers can expect this season.
Streamlined filing process
“One of the most significant AI enhancements is the automation of routine tasks,” says Rushby. AI-driven systems can now pre-populate tax returns with information from various sources such as employers, banks and other financial institutions. This reduces the administrative burden on taxpayers, minimises errors and saves time. AI systems cross-check the information for precision ensuring all necessary data is correctly filled in, thereby reducing the chances of discrepancies.
Enhanced fraud detection
AI’s ability to analyse vast amounts of data efficiently and accurately has been harnessed to improve fraud detection mechanisms. “Machine learning algorithms can identify patterns and anomalies in tax filings that may indicate fraudulent activity,” explains Rushby. By comparing current data with historical records, AI systems can flag suspicious activities for further investigation, maintaining the integrity of the tax system and ensuring honest taxpayers are not unfairly burdened by fraud.
Personalised taxpayer assistance
SARS has introduced AI-powered chatbots and virtual assistants to provide real-time support to taxpayers. These AI tools are available 24/7 to answer queries, guide users through the filing process and provide information on tax laws and regulations. By offering personalized assistance, SARS aims to make the tax filing process less daunting, especially for first-time filers and those with complex tax situations. The virtual assistants also provide updates on the status of tax returns and refunds, keeping taxpayers informed.
Improved Data Analytics
AI enhancements have significantly improved SARS’s ability to analyse and utilise data. “By employing advanced analytics, SARS can better understand taxpayer behaviour, identify trends and make data-driven decisions,” says Rushby. This capability allows SARS to optimise its resources, focus on areas that require attention and improve overall service delivery. For example, AI can help identify sectors or regions with higher incidences of non-compliance, enabling targeted interventions and educational campaigns.
Future prospects
Looking ahead, SARS is committed to further integrating AI into its operations. Future developments may include more sophisticated predictive analytics to forecast tax revenue, enhanced real-time data processing capabilities and the use of AI to develop more personalised taxpayer services. “We anticipate a focus on data related to entry and exit into and out of South Africa, a detailed analysis of individuals’ bank and credit card transactions, and a comprehensive review of SA residents’ connections to offshore trusts and companies,” Rushby explains.
The 2024 tax filing season marks a significant step forward in SARS’s use of AI to enhance the tax filing experience. By automating routine tasks, improving fraud detection, offering personalised assistance and simplifying compliance, SARS aims to make the process more efficient.
Key impacts so far include queries related to funds entering and leaving taxpayers’ private bank accounts, the sale of fixed properties not included in tax returns, vehicle registrations, directorships held at various entities, and the inclusion of investment income.
“As we transition into the digital world, the capability of any tax authority to analyse vast volumes of third-party data to circumvent fraud will be essential,” notes Rushby. Unfortunately, the current approach appears to assume guilt unless innocence is proven, leading to increased visibility of taxpayers’ private affairs through AI. However, as AI technology continues to evolve, we can expect even greater innovations in the future, further transforming the way we handle tax filings.
