South Africa: Tax authority to issue letters requesting specific corporate documents
Supplementary declaration forms (IT14SD) discontinued
Supplementary declaration forms (IT14SD) discontinued
The South African Revenue Service (SARS) announced that, beginning 16 September 2022, SARS will no longer issue supplementary declaration forms (IT14SD) to companies and close corporations.
An IT14SD form was issued by SARS as a process of verification. Going forward, SARS will issue a letter requesting specific relevant documents as a means of verification.
What taxpayers can expect
- When a company is selected for verification, SARS will issue a notification to the taxpayer. Taxpayers selected for verification will be required to submit the relevant documents as requested by SARS.
- The supporting documents must be submitted to SARS within 21 working days, or the date that is stipulated in the SARS letter, through e-filing or any other SARS official submission channels.
- Taxpayers that do not submit the requested information or supporting documents to SARS within the specified time period (i.e., 21 working days) may receive an additional assessment from SARS.
- The request for correction on e-filing will still be available for one correction, and the revised ITR14 will be subject to a risk evaluation.
What happens with existing IT14SD forms
- The verification of IT14SD forms submitted before 30 August 2022 will be covered using the previous IT14SD verification process. However, SARS may request additional supporting documents.
- IT14SD forms that have been issued by SARS but not submitted by the taxpayer by 30 August 2022 will result in a letter being issued by SARS requesting the submission of relevant documents. The taxpayer will no longer be required to submit the IT14SD.
- As of 30 August 2022, taxpayers are no longer required to submit any outstanding IT14SD forms.
KPMG observation
While the decommissioning of the IT14SD forms is welcomed by most taxpayers, it is expected that more questions will be raised by SARS on submitted tax returns. Taxpayers need to pay attention to pertinent details included in the annual income tax returns so that full and complete disclosure is made to SARS.
Prior to the IT14SD requirement, SARS performed a tax/value added tax (VAT) reconciliation, requesting clients to explain identified variances—with the responsibility being on the taxpayer.
Over the recent years, tax professionals have noticed SARS being more data-driven and technology focused. A shift towards data-driven automated routines to identify anomalies, as experienced by SARS requesting submission of “untouched” system data in a required format, may be expected as part of integrated audits. This is a practise followed by other revenue authorities around the world.
The opportunity is to transition IT14SD detective control into a self-implemented preventative control, streamline processes, update system controls and configurations, drive efficiencies, and identify the root cause of errors, creating a higher level of automation.
The compliance budget can be shifted towards tax functions gearing for a data-driven future where SARS is headed and confirm that data submitted for one tax does not contradict data used for another tax.
Read a September 2022 report [PDF 236 KB] prepared by the KPMG member firm in South Africa
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