By Samkele Mchunu
Despite ongoing challenges in South Africa’s economy, such as load shedding and impaired port and logistics operations, the South African Revenue Service (SARS) has successfully collected a gross tax revenue of R2.155 trillion for the 2023/24 financial year.
At a media briefing on the preliminary revenue outcome for the 2023/24 financial year, SARS Commissioner Edward Kieswetter announced that this figure aligns with the revised estimate, marking a year-on-year growth of 4.2% against a nominal gross domestic product (GDP) increase of 4.9%.
“Net revenue, which is the revenue after refunds have been paid to taxpayers, amounts to R1.741 trillion. This exceeds the revised estimate set by the Minister of Finance by R10 billion, representing a year-on-year growth of 3.2% or R54.2 billion more than last year,” Kieswetter stated.
This performance translates to a tax-to-GDP ratio of 24.7% and a provisional tax buoyancy ratio of 0.9% at gross level and 0.7% at net revenues.
Record Refunds and Anti-Fraud Measures
SARS issued refunds totaling R414 billion, the highest in its history, representing a 6% year-on-year increase. This includes VAT refunds of R343 billion, up 7.5% from the previous year.
“Noteworthy is that these refunds represent about 6% of GDP, and it is particularly pleasing that R120 billion of these refunds were directed to Small, Medium, and Micro Enterprises (SMMEs) and R37 billion to individuals. This is beneficial as businesses and individuals often remain cash-strapped during tough times,” Kieswetter noted.
However, the Commissioner expressed concern over fraudulent refund claims, revealing that SARS prevented the outflow of R101 billion in impermissible or fraudulent refunds and secured several successful prosecutions during the period under review.
Trade Facilitation and Compliance
SARS Customs facilitated R8.5 million in trade transactions amounting to R3.96 trillion. Exports totaled just over R2 trillion, while imports were R1.937 trillion, resulting in a trade balance surplus of R11 billion.
The Authorised Economic Operators (AEO) program, designed to provide a streamlined experience for accredited traders, added 145 new licensees this year, bringing the total to 304 AEOs.
“In our compliance environment, we have increased our voluntary compliance index from 61.6% to 63.9%. This index measures the overall compliance behavior of taxpayers across the registration, filing, declaration, and payment chain,” Kieswetter added.
Revenue by Tax Products
Total tax revenue increased by R54.2 billion (3.2%) compared to the 2022/23 fiscal year, driven by personal income taxes of R49.5 billion (8.2% year-on-year) and higher domestic VAT of R39.3 billion (8.1% y/y).
“Net Personal Income Tax, which accounts for 37.3% of total revenue, grew by R49.5 billion (8.2%) in 2023/24, supported by improved employment and wage settlement rates, as well as PAYE collections from incentives and bonus payments, predominantly from the finance sector,” Kieswetter explained.
Conversely, Net Corporate Income Tax (CIT) contracted by R31 billion (-8.9%) due to a significant decline in the mining sector, which saw a drop of R42 billion (49.0% lower than the previous year). However, CIT from small businesses increased by 8.8%.
Net Value-Added Tax (VAT) grew by R25.4 billion (6.0%), largely due to increases in Domestic VAT, import VAT, and higher VAT refund outflows.
SARS’s Commitment to Compliance and Innovation
“SARS is determined to make it hard and costly for taxpayers who willfully fail to meet their obligations. The compliance program contributed R293.7 billion by the end of March, a 26.7% increase from the previous year’s R231.8 billion,” Kieswetter stated.
Since its inception, SARS has collected R21.6 trillion in net tax revenues, demonstrating a compound growth of 9.9% per year since 1997.
“These collections have funded South African democracy and provided crucial support and services to millions,” Kieswetter remarked.
The Commissioner highlighted the importance of effective partnerships with compliant stakeholders in the tax and Customs ecosystems, noting that these relationships deliver maximum benefits for taxpayers, traders, government, and citizens.
“Ultimately, we are augmenting the work of our employees with investments in data science, technology, and artificial intelligence to make fulfilling tax obligations a seamless process,” Kieswetter concluded.
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