This project was presented to demonstrate how effective the ICA business model helped to enhance the SA Revenue Services - Increase tax collections, while eliminating tax evasion, fraud and also minimize human intervention. Proposals also made to the SADC countries to improve their tax systems.

1. Presentation by
L RO SO
New roots to Diversity and Business Innovation……….

2. South AfricanSouth African
Revenue ServiceRevenue Service
Workshop
2005/6 presentation

3. Vision & Mission Statement
Vision
to be a leading and dynamic Public
Revenue Service
Mission
to Provide an effective, efficient,
economical and sustainable
Revenue Service to ensure we meet
the Economical & Social needs and
demands of our Country and People.
National Dept. of Finance
Directorate: Revenue Service (SARS)

4. The South African
Revenue Service -challenge
Government
Business SA
Employees
Employers

5. Scope of this Project
To assist SARS:
 Increasing the number of eligible tax-payers,
 To ensure the accuracy & validity of updated tax-payers information
on SARS’ Database, through the implementation of a fully-
integrated tax system,
 To design, structure and implement strategies which will detect,
address and deter non-compliancy of Tax Laws and regulations,
 In addition to the above: Colors can also assist SARS with other
Cost Saving initiatives which can dramatically influence the
Minister’s Budget for other Ministries such as: Provincial & Local
Government, Safety & Security, Transport, etc where we have
extended knowledge (e.g. Standardizing of systems/application, Job
Creation, etc.

6. Purpose
 Fully integrated and automated Tax structure
 National system (with multi-disciplines as drivers) e.g. SARS,
Registrar of Companies, Dept of Home Affairs, Dept of Labour, Dept
of Trade & Industry, Statistics South Africa, Deeds Office, Dept’s of
Justice, Safety & Security & Correctional Services, Dept of
Transport, Dept of Intelligence,
 As much as all Efforts or Input results in an Output, the Output will
form the base for the next batch of Input. In modern times where
much dependency and reliance has been placed on Technology,
without accurate, available and accessible Memory or Data, any or
all technology is rendered worthless.
 The ISO standards and Cobit practice tools implies that “Efforts and
its Results (available data or statistics) is the key to any entity’s
success or failure”. All our proposals and working solutions include
these business Enablers.

7. Areas of Focus
 Individuals,
 Micro-businesses,
 Small & medium enterprises (SME’s),
 Large Businesses &
 Charities, Non-Governmental Organizations (NGO’s: incl. Religious
sectors), Non-Profitable Organizations (NPO’s : incl. Religious
sectors)

8. What is the 20/80 vs
the 80/20 factor
which we refer to?

9. The 20/80 factor vs the 80/20 factor
 It is the norm for most Developed Nations where the expectation of
Tax Law compliance and knowledge is rated above average, Much
reliance is placed on the Tax-payers (Individual, Business, NGO’,
NPO’s and Government departments) to comply with (a)
Registration for Tax-purpose, (b) Tax Lodgment obligations & (c)
Submitting correct Tax information, timely:
 Unfortunately these EXPECTATION has often resulted in huge tax
losses due to inaccurate and/or outdated information, tax evasion
and tax fraud. Governments and/or National Treasury Departments
were forced to invested millions of US$ and Euro’s in Tax Fraud
Audits and Risk Policies and instead of managing by EXCEPTION,
Managers/Directorates had to constantly try and manage all their
processes, at the time: exposing the organization to more and
greater Risk.

10. 80/20 Approach
 We believe that with our Approach, SARS Revenue shall be able to improve
its Information Gathering process substantially.
 In essence the current approach and system provide SARS with less than
20% of business and Personal Tax validated information. However with the
implementation of the 80/20 approach, SARS will have obtained no less
than 80% of critical business and personal tax information (certified and
validated) prior to the issuance of the “Annual Tax Forms” (business and
person).
 This Approach will allow Managers to “Manage by EXCEPTION”, by
constantly evaluating and improving the 20%, where necessary.

11. Common issues facing Micro-business &
SME’s, re:Tax Compliancy
 Registration of Taxes: all though most of these businesses are
registered for Tax, they are not often full participants of the Tax
system
 Poor Record Keeping: often has significant impact on compliancy,
thus often fail or default on accurate and timely:-
 Lodgment of Statistical reports (monthly, quarterly & annually) &
 Paying Taxes such as PAYE/SITE, UIF, SDL, VAT, etc.
 Micro business & SME’s often fail to provide for their tax liabilities
due to a lack of cash-flow and inadequate business planning, thus
fall in debt with arrear taxes + fines & penalties, due to non-
compliance with Tax Laws and regulations. Some finally end up in
Court, while others opt for closure, bankruptcy and insolvency.
 Although a great % of Micro businesses and SME’s strive towards
fully complying with the Tax Laws, a % of habitual non-compliers is
constantly busy exploiting new loop-hole to avoid paying Tax

12. Prevention is less costlier than Cure”
o Preventative and Corrective Action/measures
o Standard Practice or industry Norms allows us to apply relative or reasonable
Preventative measures to protect us from losing control of our business or interest,
however as indicated in our ICA model, certain Internal & External factors can/will
and shall result in compromising or request for Change Management of our
Current/present Risk Management Tool/system or model….hence Change is
inevitable
o But these Changes can only take place when applying the necessary Corrective
measures which will and/or should determine your new updated Preventative tool, as
included into your RMS to ensure business has taken the necessary precautions
against any previously recorded exposure/risk.
o See table for illustration
Norm/Standard AS IS
Current -Practice
TO BE (for Change Request)
Best – Practice

13. ICA (Integrated Control Architecture)
Economical forces
Technological forces
Political forces
Social forces
Vision
Mission
Values
8
Maintain Assets
2
Procurement
9
R&D
projects
3
Marketing
5
Sell service
6
Workforce
7
Maintain systems
10
Finance
1
Plan/Strategy
4
Product/Services
Centralized
Responsibility
Suppliers
Consulting
services
Investments
Lenders
The Public
Network
Objectives
Goals
Cash out
Cash in
C
C
C
C
C
C
C
C
C
C

14. ICA (Integrated Control Architecture)
Business Processes
BPMe
IPMe
5P’s & 3E’s
5P’s & 3E’s
7A’s & 3G’s
Business
Performance Measure
Individual Performance
Measure
System Performance
Measure
SPMe

15. Key Tools for the Assessment of
Business, IT & Risk Management
• 3 E’s : Output measurements
• 5M’s: Input
• 5Ps’: Process levels of an
Activity
• 7GA’s : Generic Assertions
• 3G’s
• Effectiveness, Efficiency and
Economy
• Material, Machinery, Manpower,
Method and Measure
• Plan, Prepare, Produce, Pre-
delivery and Present
• Validity (Vy), Complete (C),
Accuracy (A), Timely (T),
Valuation (Vn), Existence (E) and
Record (R),
• Guide/path, Guard/protect,
Gauge/evaluate

16. SWOT Finding StatementSWOT Finding Statement
 IDENTIFY: What we have & What don’t we have?
How do we manage what we have or don’t have ?
1. Method YES NO Adequate Inadequate
2. Material YES NO Adequate Inadequate
3. Manpower YES NO Adequate Inadequate
4. Machinery YES NO Adequate Inadequate
5. Measures YES NO Adequate Inadequate

17. POLICY
&
GOVERNANCE
TO ENSURE
COMPLIANCY
WITH
NATIONAL
GOVERNMENT &
TREASURY
LEGISLATIVE,
CORPORATE
GOVERNANCE,
PFMA, COBIT,
CAATS, AND
OTHER
RELEVANT
GUIDELINES.
PROCESSES
&
PROCEDURES
ENSURE THAT
THE SARS
PROCESSES,
PROCEDURES,
WORK AND
DOCUMENT
FLOW IS
DESIGNED &
IMPLEMENT TO
ENSURE
EFFECTIVE
CONTROLS &
COMPLIANCE.
CAPACITY
BUILDING
ENSURE THAT
SARS HAS THE
CORRECT
MANPOWER,
MATERIAL,
MACHINERY &
METHODS TO
PROVIDE AN
EFFECTIVE,
EFFICIENT &
ECONOMICAL
SERVICE TO IT’S
CUSTOMERS.
INTERNAL
SERVICE
LEVEL
AGREEMENTS
(SLA’s)
ENSURE THAT
ALL RELEVANT
PERSONNEL &
DEPARTMENTS
PROVIDE THE
NECESSARY
SUPPORT &
INFORMATION
AT THE RIGHT
PLACE, TIME
AND FOR THE
RIGHT ACTIVITY
OR PROJECT.
SERVICE
DELIVERY
TO ENSURE
EFFECTIVE,
EFFICIENT AND
AN ECONOMICAL
INTEGRATED &
USER-FRIENDLY
TAX SYSTEM
WHICH MEETS
THE NEEDS &
REQUIREMENTS
FOR EXCELLENT
SERVICE
DELIVERY.
PERFORMANCE
MANAGEMENT
TO ENSURE THAT
MANAGEMENT &
STAFF SERVICE
DELIVERY IS
EFFECTIVELY
MEASURED
AGAINST THEIR
JOB DESCRIPTION,
PERFORMANCE
CONTRACTS AND
SLA’s, FOR
COMPETENCIES &
WORTH.
OUTPUT/OUTCOME
AN EFFECTIVE FULLY INTEGRATED TAX SYSTEM, TO REDUCE EXCESSIVE LABOUR COST, IMPROVE
PRODUCTIVITY AND COLLECTIONS & REAL-TIME INFORMATION
APPROVED
BUDGET &
STRATEGY
SARS
Minister
Of
Finance
Finance
National
Governmen
t

18. Information and
IT Resources
•effectiveness •people
•efficiency •application systems
•confidentiality •technology
•integrity •facilities
•availability •data
•compliance
•reliability
Information IT Resources