The South African Revenue Service (SARS) is modernising its operations by integrating advanced data analytics and artificial intelligence (AI) to strengthen tax compliance and boost revenue collection.
SARS is using AI to analyse large amounts of data quickly and accurately, enabling the tax authority to identify tax-compliance risks and close the tax gap. By leveraging algorithms and advanced analytics, SARS can process large datasets from various sources, including third-party data such as bank transactions, financial records, beneficial ownership records, and cryptocurrency exchanges. This allows SARS to detect patterns of underreporting, tax evasion, and fraudulent activities with significantly greater precision. For example, SARS has implemented AI systems to monitor financial patterns, such as sudden increases in wealth or discrepancies between reported income and lifestyle.
AI is improving tax compliance by automating and refining processes that were once labour-intensive. SARS has introduced AI-powered tools to streamline tax assessments and detect non-compliance faster. These models can analyse taxpayer data in real-time and flag inconsistencies or anomalies for further investigation. This proactive approach has enabled SARS to recover significant revenue, with reports indicating a record ZAR 2.155 trillion collected in the 2023/24 financial year, partly attributed to AI-driven tools.
Additionally, SARS has established a dedicated cryptocurrency unit that uses AI and international cooperation to track underreported income from digital assets. This unit has automatic information-sharing protocols to identify tax evasion in the rapidly growing cryptocurrency market.
Given the increasing sophistication of SARS in using artificial intelligence and data analytics to detect tax discrepancies, it has become more important than ever for taxpayers to engage knowledgeable and experienced professionals when preparing returns, reports, and financial statements. SARS now can cross-reference a wide array of data sources—including bank records, cryptocurrency transactions, and offshore ownership structures—and detect inconsistencies with far greater precision and speed than before. High-net-worth individuals are at heightened risk, as AI tools can quickly identify mismatches between declared income and actual lifestyle or wealth patterns. In this environment, even minor reporting errors or omissions can trigger audits, penalties, or reputational harm. Therefore, relying on professionals who understand both the technical requirements and the evolving enforcement landscape is essential to ensure full compliance, minimise risk, and protect the taxpayer’s legal and financial standing.
PH Tax and Accounting has the necessary experience and expertise to navigate this complex and rapidly evolving landscape. Our team is well-versed in the latest compliance requirements and understands how SARS’s use of AI may impact individual and corporate taxpayers. We provide tailored guidance to ensure your returns, reports, and financial statements are accurate, consistent, and defensible. Whether you’re dealing with local obligations or offshore structures, we can help you minimise risk and maintain full compliance.
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