The South African Revenue Service (Sars) has pointed to ramped-up compliance efforts of its systems following a nearly R10 billion revenue overshoot for the 2023/24 financial year than February’s revised budget estimate.
Sars Commissioner Edward Kieswetter on Tuesday announced that the tax agency has collected a record gross amount of R2.155 trillion as at the end of March 2024, a year-on-year growth of 4.2% against the nominal gross domestic product (GDP) of 4.9%.
Kieswetter said Sars paid out refunds of R414bn to taxpayers, the highest-ever quantum in refunds compared to R381bn in the prior year, representing growth of 8.6%.
This brought the collected net amount to R1.741 trillion, almost R10bn higher than the revised estimate and R54bn more than last year’s R1.687 trillion.
VAT refunds grew by 7.5% to R343bn over the prior year, with R120bn and R37bn of the total refund benefit directed to SMMEs and individuals. Kieswetter said this was good when businesses and individuals remained cash-strapped.
However, Kieswetter expressed concern about potential fraud as Sars was able to prevent the outflow of R101bn of impermissible refunds in the period under review.
“While we are pleased the R414bn returned into the hands of taxpayers is good for the economy, I remain concerned about the refund fraud and abuse,” he said.
Total tax revenue increased by R54.2bn compared to the 2022/23 fiscal year, driven by personal income taxes of R49.5bn on the back of higher-than-estimated compensation of employees and higher domestic VAT.
Net personal income tax grew by R49.5bn or 8.2% in 2023/24 as employment improved year-on-year and average wage settlement rates improved from an annual average of 6.0% in 2022 to 6.3% in 2023.
Net corporate income tax (CIT), however, contracted by R31bn in 2023/24, while the mining sector saw a decline of R42bn, which was lower than the PY by 49.0%. The CIT contribution of large businesses contracted by 17.5%, while the contribution from small businesses increased by 8.8%.
Kieswetter said Sars was determined to make it hard and costly for taxpayers who wilfully failed to meet obligations.
He said the Sars’ compliance programme contributed R293.7bn as at the end of March, an increase of R61.9bn (26.7%) from the previous year’s R231.8bn.
Sars’ compliance programme uses data, artificial intelligence and machine learning algorithms to successfully counter criminality and wilful non-compliance.
These systems also ensure that no legitimate refunds are denied, while preventing impermissible and fraudulent refunds.
Examples of the successes of the compliance programme included R91.3bn debt collected from 2.6 million cases, including R420 million from 895 000 outstanding returns.
Voluntary disclosures contributed R3.5bn made up of 1 435 applications.
Where provisional taxpayers have underpaid their taxes [paragraph 19(3)], Sars collected R19.3bn from over 28 000 cases from Large Business and Individual Unit and SMMEs.
Since its inception, Sars has collected R21.6 trillion in net tax revenues.
Kieswetter said the R21.6 trillion tax collections represented a compound growth of 9.9% per year since the inception of Sars in 1997.
“This has funded the South African democracy and touched the lives of millions who would be destitute without government support and services.”
Meanwhile, Kieswetter said Sars has embarked on a process to revoke the licences of more than 50 tax practitioners as a result of general compliance failures, adding that delinquency among tax practitioners was still a big concern for the revenue service.
“We have identified 53 tax practitioners who remain non-compliant in their own taxes, which explains in part how they advise their clients and why their clients are equally delinquent,” Kieswetter said.
“Sars has commenced the process to have their licences revoked. And to date, eight licences have already been revoked, while some of them have been identified for further criminal investigation.”
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