The South African Revenue Service (SARS) has surpassed its revenue collection target for the 2023/24 financial year. The tax agency collected a gross amount of R2.155 trillion during the last tax year.
The surpassing of the collection target is a positive outcome that comes against a backdrop of ongoing economic challenges, including load shedding and logistical disruptions.
SARS Commissioner Edward Kieswetter attributed the success to growth in personal income tax (PIT) and domestic Value-Added Tax (VAT) collections. Higher than-expected employee compensation and increased domestic VAT sales fueled the rise in PIT and VAT revenue, respectively.
The R21.6 trillion tax collections represent a compound growth of 9.9% per year since the inception of SARS in 1997. This has funded South African democracy and touched the lives of millions who would be destitute without government support and services.
Kieswetter explained that the contribution of tax to South Africa's economy is significant.
This revenue performance translates to a tax-to-GDP ratio of 24.7%.
While overall revenue increased, Net Corporate Income Tax (CIT) experienced a decline, particularly in the mining sector. However, SARS emphasised its commitment to tax compliance, with the agency's compliance programme recovering an increased amount (R293.7 billion) compared to the previous year.
Net Corporate Income Tax (CIT) contracted by R31 billion (-8.9%) in 2023/24, while the mining sector saw a decline of R42 billion, which is 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%. CIT collections accounted for 18.0% of total revenue.
The SARS Commissioner also emphasises the agency's focus on taxpayer refunds. A record-breaking R414 billion was returned to taxpayers, with a significant portion directed towards Small, Medium and Micro Enterprises (SMMEs) and individuals.
Noteworthy is that those refunds represent about 6% of GDP. It is therefore pleasing that R120 billion of these refunds were directed to Small, Medium and Micro Enterprises (SMMEs) and R37 billion to individuals. This is good for when businesses and individuals remain cash-strapped. Refunds are often a form of funding during troubled times.
SARS highlighted its commitment to leveraging data science, technology, and artificial intelligence to further improve its tax collection processes. The agency expressed its pride in contributing to national development and expressed gratitude for partnerships with compliant taxpayers.
