SARS is expanding its tax register – here’s a reminder of who pays tax in South Africa

Finance minister, Enoch Godongwana has alluded to the importance of the function of the South African Revenue Service (SARS), highlighting its recent improvement and increased revenue collections.

“Over the last three years, we have seen a steady improvement at SARS, which has contributed to the necessary improvement in our fiscal position by way of improved revenue collections and coordination of cash-flow management in conjunction with the National Treasury resulting in improved public debt management,” the minister said, speaking at his first Budget Vote in Parliament on Wednesday (18 May).

“In a democratic system, taxation is a critical part of the social contract between the state and the citizens. Tax legitimacy and perceptions of fairness in the distribution of the tax burden are crucial to the willingness of citizens to pay taxes.

“Therefore, it is of utmost importance to adhere to the principles of a good tax system namely of efficiency, equity, simplicity, transparency and certainty, as well as ensuring a buoyant tax system that responds to the business cycles of the economy.”

Godongwana said that SARS will continue to expand the tax register, respond to illicit trade by removing illegal imports from circulation, investigate syndicate tax and customs crimes as well as investigate and hand State Capture related cases over to the NPA.

In April, SARS reported a rebound in economic activity in the financial year 2021/22, following the easing of the Covid-19 lockdown regulations.

In addition, tax administrative enhancements resulted in gradual improvements in overall compliance levels and hence a stronger recovery in tax revenue collected, it said.

“Over the past two years, tax policy has focused on broadening the tax base, improving revenue administration and reducing the tax burden on the tax base to stimulate economic growth,” it said.

For the period ended March 2022, SARS collected a gross amount of R1 884.9 billion (R1 540.5 billion in the prior year). Offset by refunds of R321.1 billion (R290.7 billion in the prior year), this results in net collections of R1 563.8 billion, which represented a surplus of R314.0 billion (25.1%) against the prior year 2020/21.

Measured against the Budget Estimate of R1 547.1 billion, this results in a surplus of R16.7 billion (1.1%).

The main sources of revenue that contributed to the R1 563.8 billion collected were Personal Income Tax (PIT), which contributed R555.8 billion (35.5%), Value-Added Tax (VAT) contributing R390.7 billion (25.0%), Company Income Tax (CIT), which contributed R323.6 billion (20.7%) and Customs duties contributed R58 billion (3.7%).

SARS said it continues in its endeavour to make it easy and simple and less costly for taxpayers to comply with their tax obligations.

“But SARS also makes it hard and costly for taxpayers that deliberately do not want to comply. We have made a distinction between tax revenue received and tax revenue that we collect through targeted compliance interventions.”

In the year under review, these compliance interventions resulted in the collection of R209.7 billion, representing 13.4% of total revenue collections.

Taxable income, tax assessed and average tax rate by age group

Male and female assessed individual taxpayers

Males on average earn 7.9% more than females in the taxable income between zero and R500,000. However, as taxable income increases the proportion of females declined significantly. Only 33.3% of taxpayers with taxable income between R750,000 and R1 million in 2020 were females.

This proportion declines further to only 14.1% of those with taxable income of more than R5 million. The proportion of females as a percentage of the total number of taxpayers assessed increased from 44.2% in 2017 to 46.4% in 2020. This was mainly due to more females than males becoming liable for submitting tax returns, SARS said.

Read: SARS wants more tax – here’s how much the average taxpayer earns in Joburg, Cape Town and Durban

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SARS is expanding its tax register – here’s a reminder of who pays tax in South Africa