SOUTH AFRICAN REVENUE SERVICE
PRESS STATEMENT

2 SEPTEMBER 2004

THE SARS LARGE BUSINESS CENTRE (LBC)

1. Objectives of the LBC
   • To improve interaction between SARS and South Africa's largest corporate taxpayers
   • To provide service excellence and customer intimacy through expert tax advisors
   • Improve SARS' audit capacity
   • Address the gap in skilled auditors
   • Facilitate a culture of voluntary tax compliance
   • Address low effective tax rates in certain sectors

   Note: The estimate for Corporate Income Tax in the current financial year is around R69 billion.

   The LBC replaces the Corporate Tax Centre (CTC) which was located in Randburg. The LBC will be operational from 13 September 2004. Previous micro-analysis of SARS indicated that, of the top 200 companies in terms of Corporate Income Tax contributions in South Africa, 173 (95.5%) filed their tax returns at the CTC.

   This group contributed some R26 billion in Corporate Income Tax to the fiscus during 2002. The focus of the new LBC will be to expand on these interactions with large corporations.

2. LBC Vision

   To enable and deliver an integrated range of solutions designed to establish a professional tax and custom service in South Africa comparable with international best practice.

   This vision will be given effect through:

   • Professional service delivery
   • Encouraging compliance
   • Applying specialist knowledge, skills and expertise
   • Business intelligence and effective risk management
   • Responsible enforcement
   • To break the bureaucratic culture and legacy in revenue administration

3. Services on offer
   • Specific economic sector teams will be established
   • Eight such teams will be established
   • Each team will be "self sufficient" consisting of experts in tax and customs environment and containing its own integrated assessing, audit and collections abilities across all tax types
   • One dedicated relationship manager will deal with clients within specific sectors
   • As such, these sector teams will provide "one-stop service" to large corporates
   • From inception the eight sectoral teams will provide Income Tax service to clients with the full bouquet of services introduced in a staggered approach.
   • The first sector to offer a full service package to clients will be the Financial Services sector which will be operational from October.
   • All other sectors will be fully operational in the next six months.
   • The tax services to be offered by the sector teams include:
     • Income Tax
     • Secondary Tax on Companies
     • Value Added Tax
     • PAYE - Including the Unemployment Insurance Fund and the Skills Development Levy
     • Marketable Securities Tax and Uncertificated Securities Tax
     • Donations Tax
     • Royalties Tax
     • Stamp Duty
   • Certain customs services will also be handled by the teams

   Additional services to be introduced over the next year include:

   • A transparent compliance approach
   • The dispute resolution process introduced by SARS
   • Electronic filing of returns
   • A clear audit policy
   • Advance rulings

4. The sectors
   • Mining
   • Financial services: insurance, banking and diversified financial services
   • Food, beverage and tobacco manufacturing
   • Machinery, electrical manufacturing and information technology
   • Retail trade
   • Agriculture, forestry and logging
   • Construction
   • General (including diversified groups)

   The segmentation approach will allow the LBC to specialise in complex tax and customs regulations and to develop SARS products and services in line with particular sector needs and expectations.

5. Main clients
   • Companies listed on the JSE Securities Exchange
   • Parastatals
   • Unlisted companies with a turnover in excess of R250 million
   • Major financial institutions
   • Multinational corporations and their local branches
   • High Net-Worth Individuals

ISSUED BY THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE
PRETORIA