SARS Exceeds Revenue Targets And Achieves Record Tax Collection

The South African Revenue Service (SARS) has announced that it has surpassed its revenue targets for the 2023/24 financial year.

SARS Commissioner Edward Kieswetter revealed that the tax agency collected a record gross amount of R2.155 trillion as of the end of March 2024, representing a year-on-year growth of 4.2% against the nominal gross domestic product (GDP) of 4.9%. This achievement can be attributed to the ramped-up compliance efforts of SARS’ systems.

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As part of its efforts to ensure compliance, SARS paid out refunds of R414 billion to taxpayers, the highest-ever quantum in refunds compared to R381 billion in the previous year. This represents a growth of 8.6%. After accounting for these refunds, the collected net amount reached R1.741 trillion, nearly R10 billion higher than the revised estimate and R54 billion more than the previous year’s figure of R1.687 trillion.

VAT refunds grew by 7.5% to R343 billion compared to the prior year, with R120 billion and R37 billion of the total refund benefit directed to small and medium-sized enterprises (SMEs) and individuals, respectively.

This was seen as a positive outcome, especially considering the financial challenges faced by businesses and individuals. However, Commissioner Kieswetter expressed concern about potential fraud, as SARS was able to prevent the outflow of R101 billion in impermissible refunds during the period under review. He emphasized the need to address refund fraud and abuse.

Total tax revenue increased by R54.2 billion compared to the previous fiscal year. The growth was primarily driven by personal income taxes, which contributed R49.5 billion due to higher-than-estimated compensation of employees and higher domestic VAT.

Net personal income tax grew by R49.5 billion or 8.2% in 2023/24, reflecting improvements in employment and average wage settlement rates. On the other hand, net corporate income tax (CIT) contracted by R31 billion, with the mining sector experiencing a decline of R42 billion, lower than the previous year by 49.0%. While large businesses saw a 17.5% contraction in CIT contribution, small businesses recorded an 8.8% increase.

Commissioner Kieswetter emphasized SARS’ commitment to making it difficult and costly for taxpayers who willfully fail to meet their obligations. SARS’ compliance program contributed R293.7 billion as of the end of March, indicating a significant increase of R61.9 billion (26.7%) from the previous year’s figure of R231.8 billion.

The compliance program utilizes data, artificial intelligence, and machine learning algorithms to counter criminality and non-compliance. These systems ensure that legitimate refunds are not denied while preventing impermissible and fraudulent refunds.

Some notable successes of the compliance program include the collection of R91.3 billion in debt from 2.6 million cases, including R420 million from 895,000 outstanding returns. Voluntary disclosures contributed R3.5 billion, consisting of 1,435 applications.

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In cases where provisional taxpayers have underpaid their taxes, SARS collected R19.3 billion from over 28,000 cases involving large businesses, individual units, and SMEs. Since its inception, SARS has collected a total of R21.6 trillion in net tax revenues.

Commissioner Kieswetter highlighted the issue of delinquency among tax practitioners and its impact on compliance. SARS has identified 53 tax practitioners who remain non-compliant in their own taxes, which may influence their advice to clients and contribute to their clients’ delinquency.

As a result, SARS has initiated the process to revoke the licenses of these tax practitioners. Eight licenses have already been revoked, and further criminal investigations are underway.

Commissioner Kieswetter concluded by acknowledging the significant role that tax collections play in funding the South African democracy and providing support and services to millions of people. The successful revenue collection by SARS reflects the agency’s commitment to ensuring compliance and contributing to the country’s economic growth.