Using modern data technology to enhance the effectiveness of lifestyle audits in the fight against corruption and tax evasion

Abstract

Background: Tax administrations have traditionally used manual processes, which are costly and time-consuming, to conduct lifestyle audits. This study investigates the use of modern data technology – such as Big Data, data analytics, artificial intelligence, and social media analysis – to improve the effectiveness of lifestyle audits and of tax administration. Main purpose of study: The study’s main purpose is to establish to what extent lifestyle audits can be enhanced by using modern information technology in the fight against corruption and tax evasion in South Africa. Method: A mixed method approach was followed: a literature review was conducted on various modern technologies to obtain a clear and simple understanding thereof; responses to a questionnaire were obtained to understand the public’s view on the use of modern technology by SARS and the effectiveness thereof; and the potential sources of data for use by SARS were surveyed. Results: Various modern technologies are discussed, and cases in which global tax administrations have applied these technologies with success are identified. Respondents to the study’s questionnaire expressed that SARS may not be utilising modern technology to its full extent, and respondents agreed that these technologies could significantly improve the effectiveness of SARS. Conclusions: Modern data technology can significantly improve the effectiveness of lifestyle audits and of tax administration and collections in the fight against corruption and tax evasion.