- Value Added Tax (VAT)
- VAT201 submission deadlines
- Electronic Tax Management Software (ETMS)
- eFiling robot – automating interactions with the revenue authority
- Our experience
Are you looking for a way to automate VAT201 and the menial tasks in your tax processes? A software robot may be the answer. Robots are computer programs that are designed to complete specific tasks. While robots are capable of doing any task, they are most commonly used to automate the repetitive tasks that are often time consuming. With robots, businesses can free up their resources to focus on the things that only people can do!
“Tax Automation”, “Tax Digitalization” and “The Digital Tax Department” are words that flow from those consulting firms that label themselves as ‘Audit, Tax, Advisory’, but do they understand what automation means when their business model is subservient to their timesheet software than ensures they hit their billable hour quota . . . the precise opposite of business process automation. Tax Software is the answer to many of the problems that tax professionals, or finance professionals responsible for tax, face on a daily basis under the burden of being compliant with the revenue authority.
Value Added Tax (VAT)
The Organisation for Economic Co-operation and Development (OECD) states that 170 countries now use VAT as a general consumption tax. Each country choose the number of VAT tax rates and the rules in regard to each tax rate. These individualized rules result in varying forms to submit to the revenue authority. The South African SARS eFiling VAT201 form can be downloaded and found here.
VAT201 submission deadlines
In South Africa, the SARS VAT submission deadlines and VAT payment deadlines are as follows:
- If utilizing the SARS eFiling Payment Mechanism – the last working day of the of the month following the relevant period.
- All other payment methods are due on the 25th of the month or the last working day preceding the 25th of the month
Want to find out more about what electronic tax management can offer? Checkout our eBook.
Electronic Tax Management Software (ETMS)
Electronic Tax Management Software is the best tax software – a software solution that automates the tax processes and tax administration of an organisation; it is to tax what Xero and Sage are to financial processes (want to find out more about this difference in software – read this blog: Tax management software vs finance software). An Electronic Tax Management Solution starts where the financial software ends, check out this e-book that explains what you can expect from an Electronic Tax Management Software.
Electronic Tax Management Software should include a Robot that automates many of the interactions an organisation has with the revenue authority’s portal, in the case of South Africa, that portal is eFiling. Of course, an Electronic Tax Management Software should be cloud based and have 99.99% uptime availability.
eFiling robot – automating interactions with the revenue authority
The term “RPA” or “Robotic Process Automation” is an over-used term in recent years, every software claiming that it has a robot to replace the work that a person would otherwise have manually executed. In the context of the SARS eFiling site, this is the what an organisation should expect from a robot:
SARS sends lots of correspondence to its “customers” (using the term “customer” in the context of an organisation that mandates a share of your revenue appears to be mildly inappropriate). Once VAT201 eFiling, or any other tax filing, has been submitted, SARS will send the relevant user in the organisation a Statement of Account, which contains all of the submitted payment values in the relevant tax year-to-date. Thereafter, SARS issues correspondence if they will require any further action in respect to that specific submission; it may be correspondence in the form of a Verification Request, or an Investigation, or a full blown Tax Audit (something every company wants to avoid).
An eFiling Robot should handle everything, specifically it should do FOUR things with this correspondence. First, it should collect the correspondence from eFiling on a regular basis, second it should deposit the correspondence in a centralized “inbox” or other storage area in the ETMS, thirdly, it should attach the correspondence to the relevant tax filing for the specific period, and fourthly, it should notify the person responsible for that specific tax filing of the correspondence.
The days of having to log into eFiling on a regular basis to look for any correspondence that may have been generated are over, an eFiling Robot will do this with a frequency that a person cannot. Most importantly, the eFiling Robot will ensure that you’ll never miss communication again.
Auto-create verifications / investigation / audits
Once the eFiling Robot has collected a notice from SARS in respect of a Verification, Investigation or Audit, the ETMS should use natural language programming to recognise the nature of the correspondence and automatically create an object within the ETMS. This will serve as a reminder of the deadline, which is usually 21 days after the notification, as well as a place to manage the entire workflow of the response to SARS.
A Statement of Account is a document produced by SARS in respect of all the submission, payments, penalties and interest accrued to an organisation in respect of a specific tax type. The Statement of Account is the proof that every accountant wants to see before the SARS submission deadline has expired; this document helps them sleep at night!
eFiling automatically creates a Statement of Account following the expiration of the deadlines mentioned above, but they don’t actually send it out, they send out a notification that a Statement of Account has been created and the user is required to log-on to eFiling to retrieve the document. A holding company that has 50+ legal entities will have to perform that activity 50 times, and even more if there is any irregularity in the payment process.
An eFiling Robot should automatically and comprehensively pick up the values of the Statement of Account, in terms of the submission value, payment value and the values of any penalties on interest, after the accountant has completed the tax preparation. It provides you the protection and peace of mind that you don’t miss the notification.
Further, the eFiling Robot should enable the user to initiate the creation of a Statement of Account on eFiling without having to rely on the frequency defined by SARS itself, and without having to log into eFiling to perform the initiation.
Once the eFiling Robot has the value of the submission, payment, penalties and interest (where relevant, hopefully none of the last 2 items!), those values should be added to the specific filing/submission in the ETMS itself, such that the user doesn’t need to either log in to eFiling or to locate the Statement of Account itself.
Compliance status notifications
SARS eFiling displays a “Compliance Status” against individual tax types as well as at a company level itself, and is illustrative of the state of an Organisation’s tax compliance. This compliance indicator is not as simple as measuring if there is an outstanding submission of an amount outstanding for any tax type; we are reliably informed that SARS connects to multiple databases, including National Treasury, to verify whether or not a company should be given the privilege of being “Tax Compliant”.
An eFiling Robot should connect to eFiling and download the compliance indicator and connect it directly to the specific tax filing so that the user is able to identify if the filing their are working on is non-compliant, for any reason.
The real-time view of tax compliance that an eFiling Robot provides enables an organisation to make the necessary adjustments to their status with SARS to get the “Green Tick” and re-achieve the tax compliant status.
In order to submit a VAT201 eFiling submission, an organisation has historically logged into eFiling and completed the input tax, output tax and diesel refund (where applicable) information directly into eFiling, and submit within the eFiling system.
An eFiling Robot should enable organisations to capture all the values related to the VAT201, identical to the VAT201 eFiling form (thereby avoiding any incorrect deductions!) and provides assistance to the user to submit the VAT201 directly from the Electronic Tax Management Software into SARS eFiling.
You don’t need to be a self-employed, full service professional tax practitioner, you can have the satisfaction that the Revenue Authority has received your tax submission accurately, comprehensively and timeously.
At Konsise, we work with some of the largest companies in the country, and have a lot of experience solving the problems that companies have in their dealing with SARS. We interact directly with the people who develop the eFiling system and have proven highly influential in the developments, making it easier for companies to automate their processes.
We have too many customers to generalize, but for the purpose of this article, I shall summarize what companies with lots of legal entities and lots of tax filing obligations want in terms of automation:
- One version of the truth – companies want a single system where they can see everything. The value of all their submissions, all the relevant documents, proof of submission, all the correspondence from SARS and a record of all activities.
- Real-time statement of account information – companies want peace of mind that their tax return was submitted correctly to SARS, and that their payment was received timeously, avoiding the automatic penalties that arise from a late payment.
- Tax Clearance Certificate – companies want assurance that they are 100% clear in terms of tax compliance in order that there will be no business interruption caused by the inability of a government entity to issue purchase orders or to make payments to the company.
- Workflow – companies want software that reflects and automates their existing processes and procedures, and that adds value to their tax administration without any duplication occurring.
- Reporting – companies want, at the click of a button, to view a report that shows all the tax obligation of the company and the status, in terms of both submission and payment deadline, of each of the filing obligations based on the period the report is scrutinizing.
- Analytic Reviews – Prior to submitting the return to SARS, companies want to be able to view an analytic review of the tax return vs the prior period, or the same period in the prior year (for monthly submissions such as VAT). They also want the ability to record comments against the variances, where material, both for internal explanation and for the record.
If this sounds interesting and you would like to learn more about how Konsise acts as an Electronic Tax Management Software, please schedule a demo with Belinda.