Edward Kieswetter agrees to further two years at Sars

SA Revenue Service (Sars) commissioner Edward Kieswetter has agreed to extend his term by a further two years, helping to ensure leadership continuity and cement the turnaround at the tax authority.

The presidency said on Tuesday that President Cyril Ramaphosa had extended Kieswetter’s term of office “to enable an orderly leadership transition in the organisation”.

Kieswetter took over as commissioner in March 2019, with a mandate to rebuild the tax authority, whose capacity and integrity were severely damaged by its Zuma-era commissioner Tom Moyane, who Ramaphosa fired in November 2018 on the recommendation of the Nugent commission of enquiry into what had gone wrong at Sars.

His five-year term was due to end at the end of April and he had agreed with the president in early February to stay to oversee the transition. It is understood he was reluctant for family reasons to serve another five-year term.

The front-runner to take over from Kieswetter is thought to be Sars deputy commissioner for taxpayer engagement and operations Johnstone Makhubu. Makhubu, who joined Sars in 2016, was one of three deputy commissioners appointed in June to the newly created post.

Under Kieswetter’s leadership Sars has improved taxpayer compliance, rebuilding the tax authority’s expertise and doing much to restore its stature and credibility.

Kieswetter said on the sidelines of last week’s budget speech that Sars’ compliance initiatives had yielded R210bn for the fiscal year to date that would not otherwise have been collected. This was up 26% on the previous year. With the average level of compliance still at only 65%, there was yet more to be gained from improving compliance, he said, using big data analysis and other tools.

“A well-functioning tax administration within a growing economy is the most sustainable path towards improving the country’s fiscal integrity,” he said in a statement.

Sars said last week that cash receipts emanating from its compliance efforts amounted to R124.7bn, up from R105.1bn in the previous year. Leakage prevention measures delivered R85.6bn, up from R61.8bn. 

About R70bn of the extra money came from collecting outstanding debt from defaulting taxpayers, with compliance initiatives in the large business and international segment yielding R17.2bn and enforcement in syndicated tax and customs crimes delivering R13.5bn, up 246%.

In a weak economy Sars has had to work harder to deliver on the revenue estimates which the Treasury pencilled in.

In November’s medium-term budget policy statement the Treasury revised down its estimate by R57bn relative to the February 2023 budget, with corporate income taxes falling particularly sharply as global commodity prices declined.

In last week’s budget it trimmed the projected revenue undershoot to R46bn, with mining royalties delivering R9bn more than expected in November, mainly thanks to the sale of strategic oil reserves.

With the president having provided more certainty about the leadership of Sars, the question is now when he will provide clarity on the leadership at the Reserve Bank, where Ramaphosa has yet to make an appointment to replace deputy governor Kuben Naidoo, who departed in December.

The five-year terms of office of governor Lesetja Kganyago and of the other two deputy governors are also due to end later this year and finance minister Enoch Godongwana has indicated the president may make an announcement on all four posts soon.

Update: February 27 2024
This story has been updated with new information throughout. 

joffeh@busineslive.co.za