Abstract
Donations tax was introduced into South African tax law 56 years before the start of the fourth industrial revolution. Based on the 1955 to 2022 annual tax collections, this tax type combined with other wealth taxes has yielded less than 1% of annual tax collections. Donations tax is currently administered by SARS through a manual system that requires the taxpayer to submit a manual IT144 donations tax declaration form either in the SARS branch office or via the SARS back-office email address, with the relevant proof of payment which can only be processed through e-filing. Therefore, due to the manual process, SARS is reliant on the taxpayer submitting the IT144 donations tax declaration form to detect donations tax transactions which creates an opportunity for taxpayers with negative attitudes towards paying taxes to simply evade donations tax. This study applied a mixed methodology which included both qualitative and quantitative research methods to achieve the research objectives. The qualitative aspect of the study sought to build a case on how technology can be used to improve the collection, compliance and enforcement of donations tax in South Africa by conducting an in-depth review driven by well formulated research questions. The quantitative aspect of the study analysed tax practitioner views to determine whether SARS regularly conducts donations tax verifications and or audits, and to further determine whether taxpayers may be evading or avoiding donations tax in South Africa due to SARS reliance on the manual process to administer donations tax. The research suggests that the digitalisation of donations tax administration can assist SARS to improve its detection capacity, influence taxpayer compliance behaviours by making it easy for taxpayers to be compliant and improve the overall administration and compliance to donations tax legislation. The findings obtained from the tax practitioners suggest that taxpayers may be avoiding or evading donations tax in South Africa due to SARS not having adequate internal controls to detect donations tax transactions outside of the submitted IT144 forms and taxpayers mistakenly evading the tax due to a lack of education.