1. SARS Budget Vote Presentation to the Ad-hoc Committee on Finance 2 June, 2004

2. Contents 10 Years of delivery Key Government Challenges Revenue Overview Service Assessment Enforcement Customs Law Administration Siyakha Risk Management People Technology Finance Corporate Relations Internal Audit Communications Road Ahead

3. CONGRATULATIONS ON YOUR ELECTION! Welcome to new members Thank you for your support…

4. 10 years of delivery.. BEFORE Low Revenue Weak customs Inefficient processes Ineffective enforcement Poor compliance Poor technology Low skills AFTER Significantly increased revenue collections Visible and more efficient customs More efficient, streamlined and integrated processes Visible and more efficient enforcement Increased compliance culture Enhanced and stable technology platform Enhanced focus on development of technical and management skills

5. But, much still needs to be done! Tax gap – more revenue Trade control vs facilitation balance Compliance culture Process innovation Product redesign Focused enforcement Industry analyses Better skills Integrated systems Document management

6. Key Government Challenges Efficient delivery of social grants to rural beneficiaries Expanding the Public Works programme Addressing HIV and AIDS and other emerging diseases Matching the skills to the requirements of the economy Meeting increasing demand for housing and services Promote National identity and pride Border security Reducing the levels of crime Provide the necessary skills the economy needs Extend and protect the fruits of democracy to most vulnerable groups Position SA strategically in the global environment Enhance service delivery and capacity Improve intergovernmental relations and integration in implementation

7. Achievements For The Past Six Years R 'billion1998/91999/02000/12001/22002/32003/4 Target 179.2 193.9 213.6236.8 268.5 310.0 Collections 184.8 201.4 220.3252.3 282.2 302.4 Above/under target 5.6 7.5 6.7 15.5 13.7 (7.6) Total additional collections (10 year period) 50.4

8. Sources of Revenue 2004/05 Most significant change in the contribution from taxes this year is a higher contribution from Excise & VAT and a corresponding lower contribution from STC (approximately 2%).

9. Gross Tax Revenue 2001/02, 2002/03 and 2003/04 Revenue Source (Rbn ) 2001/022002/03 Y/Y Growth 2003/04 Y/Y Growth PIT90.494.34%98.34% CIT42.455.731%59.77% VAT61.170.115%80.615% Other58.561.96%63.93% TOTAL252.4282.012%302.57%

10. Fiscal overview R million1999/002000/012001/022002/032003/04 Total Revenue 198,162.4 215,591.9 248,262.5 278,507.8 299,390.2 Total Revenue as % of GDP24.2%23.6%24.6%24.2%24.5% Total Expenditure 214,749.9 233,934.0 262,904.5 291,529.1 329,013.8 Total Expenditure as % of GDP26.2%25.6%26.0%25.4%26.9% Main Budget Deficit (16,587.5) (18,342.1) (14,642.0) (13,021.4) (31,385.2) Deficit as % of GDP-2.0% -1.4%-1.1%-2.6% State Debt Cost 44,289.7 46,320.9 47,580.7 46,807.7 46,312.0 Debt Service Cost as a % of GDP5.4%5.1%4.7%4.1%3.8% GDP 819,420 914,6341,010,9191,149,8911,223,805 For most developing countries prioritising human development needs is overshadowed by the funding thereof. A recent UNDP report used South Africa as an example to developing countries of how to fund development by broadening the tax base.

11. 1,7 Million Import transactions 1,4 Million Export transactions 3 000 Bonded Warehouses 3 000 Rebate Manufacturers 14 000 SARS Employees 136 000 Registered Traders/Operators 1 451 Manufacturers of excisable products & 4 licensed distributors 1,4 Million SACU Movements SARS Volumetrics 4 Million Individual taxpayers 1,3million Corporate Taxpayers 536 281 Vat vendors 274 764 PAYE Employers

12. SERVICE

13. Service Created dedicated service capacity at all SARS offices Established a free e-filing service for frequent filed taxes Consultation on draft taxpayer service charter Established two major inbound call centre in KZN(110 seats growing to 220) and WC (120 seats growing to 280) Outbound call centre in Gauteng for debt collection / outstanding returns: (60 growing to 140 seats in mid-July 2004) Simplified tax returns for easier completion and compliance Extended taxpayer education to increase awareness of tax obligations Created the independent Service Monitoring Office to monitor service Introduction Dispute Resolution Process for tax disputes (2003) and Customs (2004)

14. Service: New Branch Offices KZN Durban Branch Office in Durban Durban Customs Branch Office in Durban Pietermaritzburg Branch Office Pietermaritzburg satellite compliance office Pinetown Branch Office Mount Edgecombe Branch Office Western Cape Western Cape Call Centre Taxpayer Service Branch Offices were also opened in the following locations: Bellville Revenue Branch Office Interim Cape Town Revenue Branch Office Cape Town Customs Branch Office Cape Town International Airport New Cape Town Revenue Branch Office Beaufort West Revenue Branch Office George Revenue Branch Office Parliamentary Service Unit – Cape Town Paarl Revenue and Excise Branch Office Worcester Revenue and Excise Branch Office

15. Service : Next Phase Western Cape (2004) Stellenbosch Revenue and Excise Branch Office Cape Flats Revenue Branch Office Cape Town International Airport Customs Branch Office Upington Revenue and Customs Branch Office Vredendal Revenue and Excise Branch Office Saldanha Customs Branch Office Gauteng (2004) Pretoria East : revenue office (March, 2004) Johannesburg, in Carlton Centre. Revenue and Customs Branch Office (April 2004 June 2004) Enforcement Centre in Megawatt Park (August 2004 onwards) Randburg : Revenue branch office (August 2004) Soweto : expanded Revenue office. (August 2004)

16. Service: KPA’s 1. To create and maintain a clear SARS CRM strategy 2. To implement SARS CRM strategy 3. To ensure effective Taxpayer education 4. To create and maintain a Taxpayer charter to meet citizen's needs to ensure effective service complaints and queries process 5. To ensure effective compliance with the Dispute Resolution process 6. To simplify administrative requirements for small business

17. The SARS Corporates Office Located at Megawatt Park, Johannesburg single office for large SA corporates Will cater for all taxes (currently only income tax) Start with 3 industry segments; 8 segments by end of financial year Each segment will have account / relationship managers Dedicated service for assistance to foreign investors A new advance rulings facility will be introduced early 2005 (legislation

18. Corporates Office: KPA’s 1. To finalise a compliance and service strategy for large business organisations 2. Implement industry segments 3. Develop and implement audit strategy for corporates 4. Improvement in service to corporates 5. Revenue collection 6. Manage payment process efficiently