Gordhan halts SARS revamp

SOUTH African Revenue Service (SARS) commissioner Tom Moyane has been instructed by Finance Minister Pravin Gordhan to halt the implementation of his ambitious restructuring plans.

The far-reaching restructuring project for the tax authority was one of the first initiatives undertaken by Mr Moyane following his appointment as commissioner in October 2014, but it has been stopped pending an assessment of its implications by the minister.

The revamp of the organisation that included overhauling its operating model, information technology system and personnel structure was scheduled to be completed in May this year.

Treasury spokeswoman Phumza Macanda said on Wednesday the minister had asked SARS to place all major initiatives on hold but had not asked that the plans be terminated.

She said termination of the restructuring project and other plans would be a major decision which Mr Gordhan did not feel he was in a position to take so soon after his appointment on December 11.

His immediate concern following his sudden appointment by President Jacob Zuma as a replacement for his short-lived predecessor, Des van Rooyen (now minister of co-operative governance and traditional affairs), was to address the situation at South African Airways, which had been at loggerheads with former finance minister Nhlanhla Nene over the nature of a contract with Airbus.

The minister met Mr Moyane last month as part of a programme to meet all the entities falling under the Treasury.

Ms Macanda said Mr Gordhan would be assessing the SARS restructuring project over the next few weeks with his top priority being to maintain the stability of the organisation.

SARS faces the enormous challenge of meeting the tough revenue targets set out in the medium-term budget policy statement in the context of a stagnating economy.

SARS spokesman Sandile Memela responded to questions about the fate of the restructuring project saying: “The issues you raise are best dealt with by the office of the minister.”

Any differences between the minister and the commissioner over the restructuring of SARS could be just one of a series of clashes between them.

Their relationship got off to a rocky start as Mr Gordhan was perturbed by Mr Moyane’s allegations about a controversial “rogue” investigating unit that was set up within SARS while Mr Gordhan was the commissioner, and by Mr Moyane’s purging of top SARS executives allegedly implicated in it.

The plan involved the introduction of a new operating model for SARS based on the recommendations of a review into its functioning, processes and practices conducted by consultants from Gartner, Bain & Company and KPMG. It entailed a structural revamp to align the organisation with its strategic priorities, clarify decision-making accountability, and streamline governance structures.

The review involved an assessment of the governance and decision-making processes and development of a road map to align it with the new operating model.

A review of aspects regarding information and communications technology, as well as modernisation was also undertaken. The review included a revision of the governance of the sourcing and procurement of information technology.

Also reviewed were contractual agreements and service-level agreements for information technology as well as the ownership of intellectual property.

The consultants were furthermore asked to determine the return on investment of past expenditure on modernisation drives.

In a briefing to Parliament’s finance committee in August last year Mr Moyane said the consultants had finalised their diagnostic analysis and at that stage were drawing up solutions and detailed plans to bring about the envisaged improvements. These included a complete turnaround at SARS’s Customs and Excise division to ensure more control and a smooth flow of goods at ports.

The restructuring plan also involved initiatives to maximise taxpayer revenue and compliance, improve customer service and develop expertise.

Another of Mr Moyane’s well-received endeavours was to beef up the capacity of SARS to deal with base erosion and profit shifting.

He employed 24 more tax specialists in the transfer pricing unit of SARS’s large business centre.