1. Competency and Capability Requirements Presenter: Pheko Masebe Government CIO Summit Towards reducing costs of doing business in government and contributing towards achieving clean audit 1 Date: 29/05/2013

2. Presentation Outline Introduction SARS Overview Operations – Technology division IT Business Capacity and competency building blocks SARS Journey Critical Success Factors 2

3. Collect all revenues due Ensure Efficient & Effective Revenue Collection Ensure Efficient & Effective Control over the Movement and Manufacturing of Goods Advice the Ministers of Finance and Trade SARS, like most tax agencies worldwide, has insufficient resources, to check at micro level, the compliance of individual taxpayers/traders Therefore the strategy adopted is Voluntary Compliance The SARS Mandate

4. Voluntary Compliance Voluntary Compliance is based on two Fundamental Principles: Make it easy as possible for those trying to comply Make it very hard for those trying to avoid paying their fair share Improve Service Improve enforcement Some tax payers/traders will always try to comply whether effective enforcement exists or not – people who believe in doing the right thing Some tax payers/traders will not comply whether effective enforcement exists or not – the criminals The goal of voluntary compliance is to influence the undecided majority who will choose one way or the other based upon how well we implement this strategy Key to this approach in ensuring that taxpayers/ traders understand their obligations

5. SARS’ COMPLIANCE MODELS SEEKS TO INCREASE VOLUNTARY COMPLIANCE Enforcement Service Education Environmental Knowledge and Understanding Effective Segmen- tation Risk Assessment Customer Awareness SARS’ COMPLIANCE MODELS SEEKS TO INCREASE VOLUNTARY COMPLIANCE

6. 6 SARS Volumetric 2,7 Million Import Transactions 1,8 Million SACU Movements 3000 Total Seizures 68, 775 Consignment stopped 300, 268 PAYE Employers 6.7 Million Individual Taxpayers 14 Million Passengers moving through Customs 573, 876 VAT Vendors 1, 4 Million Corporate Taxpayers 1,998, 221 Export Transactions 23 Million Returns Processed 14 672 SARS EMPLOYEES

7. MODERNISATION PERFORMANCE IMPROVEMENTS HAVE BEEN DRAMATIC… 7 All Taxes Number of returns received electronically % electronic submissions to total returns Payments processed electronically % electronic payments to total revenue 2006 1.6m 8% R55bn 13% 2013 22.5m 98% R759bn 93% Personal Income Tax (PIT) Number of returns filed electronically eFiling Branch Interface (Service Manager) % electronic returns received Number manual returns received Average assessing turnaround times 2006 120k 120k 3% 0% 3% 4m 45-55 days 2013 6.7m 3.8m 58% 2.9m 41% 99% 10k 91% within 3sec * Depending on Bank Processing Average refund turnaround times 70% within 24hrs * * TAT depending on Bank Processing

8. HISTORIC CHALLENGES Systemic issues inherited by SARS: Systems and Technology Processes- focus was on functions -not integrated Human Resources: limited skills in information technology, management and accounting – Financial- No standards for complying with annual financial statements. Communication and Service- Communication extremely poor internally externally and with taxpayers. Tax system- SARS inherited eleven tax administrations all with different rate structures. Customs- lack of systems and manual processes which resulted in unreliable and inadequate data.

9. Create and replicate process capabilities within Government Continuous Improvement of Business Operations Customs Support RiskService Tax Modernisation 1.Product Design and Development 2.Process Solution Design and Implementation Architecture standards and methodology Solution delivery Process Measurement and Benefit Tracking Continuous Improvement Policies and Procedures Conformance Auditing 1.Business Reporting and Analytics Data analytics and mining Business Reporting Knowledge Management 2.Performance Management Capacity Planning Performance Dashboards Build Capability SARS embarked on a journey to transform into an effective and efficient organisation 9 1.Set a baseline 2.Concentrate high volume work 3.Standardise processes 4.Organise work in pipelines Siyakha

10. Competency & Capability Building Blocks 10 Culture Leadership Alignment Accountability Performance Long / Short term success Behaviour Passion Collaboration

11. Sourcing Strategy Sourcing Third Party Services – Contract management competency utilised when sourcing Third Party services. – Developed internal competencies (Lawyers, Accountants, Auditors etc) – Weekly vendor engagements (All Suppliers every Thursday) Talent Sourcing Graduates – In 2012 received seven thousand applications (7000) – Followed a robust selection process – Two hundred (200) final shortlisted graduates and fifty (50) appointed and placed in different departments. Talent Database management – Modelled recruitment Agency – Talent database created to source candidates with required IT skills – Recruitment savings on an annual basis 11

12. REMUNERATION STRUCTURE 12 Remuneration practice within Technology division reviewed and an equitable, transparent and market based pay model introduced. Current remuneration solution addresses the attraction, retention and career management of appropriate IT skills.

13. Established SARS Learning Academy to support SARS culture of learning In rolling out new technology, volumes of employees have to be trained SARS Learning Academy have capacity to provide training therefore limit use of external service providers. 13 SARS Learning Culture

14. Organisation structure aligned to SARS Operating Model Technology structure elevated to a GE level Currently 11 393 employees in Operations There are 900 employees in Technology division 14 Organisation Structure

15. Operations UNIT under COO 15 Audit Branch Operations Business Systems Capacity Management Case Selection Centralised Processing Operations Chief Information Officer Compliance Centre Contact Centre Debt Management & Finance Operations HR - Compliance, Audit & Debt Management and Contact Centre HR - Modernisation, Technology & Ops Enabling HR - Operations - Service & Scanning Modernisation Strategy & Design Operational Service Escalations & Support Programme Management

16. 16 Technology, Tools and Resources Leverage technology to enable innovation Dominant technologies used IBM and Microsoft Intricate budget process involving business and National Treasury especially for Modernisation Agenda Modern facilities

17. Metrics and Incentives 17 Vigorous engagement on scorecards Adhoc Salary Increase and Promotions Biannual process Use 1% budget allocated Internal growth opportunities Opportunity to address pay disparity Staff retention

18. Learning's The absence of a public service model Re-organising for efficiency across government, integration across government –reduce administrative burden- benefits of scale Value of people, processes and technology Implementation of an ethical, business approach Fostering confidence across government – increases compliance Creating a learning, sharing, holistic, integrated continuous improvement culture across government

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