While South Africa’s economy continues to face challenges of load shedding and impaired port and logistics operations, the South African Revenue Service (SARS) has collected a gross tax revenue of R2.155 trillion for the 2023/24 financial year.
Addressing a media briefing on the preliminary revenue outcome for the 2023/24 financial year, SARS Commissioner Edward Kieswetter said this amount was in line with the revised estimate representing a year-on-year growth of 4.2% against a nominal gross domestic product (GDP) of 4.9%.
“Net revenue, which is the revenue after refunds have been paid to tax payers amounts to R1.741 trillion, which exceeds the revised estimate set by the Minister of Finance by some R10 billion, representing a year on year growth of 3.2% (or R54.2billion) more than last year.
“This revenue performance translates to a tax-to-GDP ratio of 24.7% and a provisional tax buoyance ratio of 0.9% at gross level and 0.7% at net revenues,” Kieswetter said.
The revenue service refunded taxpayers with an amount of R414 billion, representing a year-on-year growth of 6%, which is the highest quantum of refunds paid out in the history of SARS. It increased by R33 billion from the prior year.
Vat refunds amounted to R343 billion, which represents a growth of 7.5% since the prior year.
“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 business and individuals remain cash strapped. Refunds are often a form of funding during troubled times.
“Whilst we are pleased that the R414 billion returned into the hands of taxpayers is good for the economy, I remain concerned about fraud and abuse of our refund system. In the period under review, SARS was able to prevent the outflow of R101 billion of impermissible or fraudulent refunds and secure a number of successful prosecutions,” he said.
In trade facilitation for the period under review, SARS Customs facilitated a total of R8.5 million trade transactions amounting to R3.96 trillion. Exports amounted to just over R2 trillion, whilst imports were R1.937 trillion, resulting in a trade balance surplus of R11 billion.
“Our programme for Authorised Economic Operators (AEO), which is designed to give traders a green lane experience should they be accredited and maintain the high level of compliance, this year we added R145 new licensees, bringing the total number to 304 AEO.
“In our compliance environment, an encouraging trend is that we have increased our voluntary compliance index from 61.6% to 63.9%. This index was developed in 2020 in support of our strategic intent of our voluntary compliance and measures the overall compliance behaviour of tax payers across the compliance value chain of registration, filing declaration and payment,” the Commissioner said.
Revenue by tax products
Compared to the 2022/23 fiscal year, total tax revenue increased by R54.2 billion (3.2%), driven by personal income taxes of R49.5 billion (8.2% year on year or y/y) on the back of higher than estimated compensation of employees, as well as 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, as employment improved year-on-year from and average wage settlement rates improved from an annual average of 6.0% in 2022 to 6.3% in 2023. PAYE collections from incentives and bonus payments predominantly from the finance sector also boosted PIT revenue.
“Net Corporate Income Tax (CIT) contracted by R31 billion (-8.9%) in 2023/24, while the mining sector saw a decline 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,” he said.
The Net Value-added Tax (VAT) growth of R25.4 billion (6.0%) is largely attributable to Domestic VAT (up by R39 billion (8.1%), import VAT (higher by R10.0 billion (3.9%) and higher outflow of VAT Refunds R23.9 billion (7.5%).
“SARS is determined to make it hard and costly for taxpayers who willfully fail to meet their obligations. The SARS compliance programme contributed R293.7 billion as at end of March (preliminary). This is an increase of R61.9 billion (26.7%) from the previous year’s R231.8 billion,” the Commissioner said.
Since its inception, SARS has collected R21.6 trillion in net tax revenues.
“The R21.6 trillion tax collections represents 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.
“We, who have the privilege to work at SARS, are justly proud of these achievements because these efforts contribute directly to nation-building and sustain our democracy,” Kieswetter said.
He said the revenue achievements of the past 30 years would not have been possible if it were not for the effective and beneficial partnerships established by working with compliant stakeholders in the tax and Customs ecosystems that deliver maximum benefits for taxpayers, traders, government, and citizens.
“Ultimately, we are augmenting the work of our employees, with the investment in data science, technology, and artificial intelligence, towards the goal of making the fulfilment of tax obligation a seamless process,” Kieswetter said.
