SARS collected an amount of R1.287 trillion against the 2019 budget estimate of R1.302 trillion resulting in a deficit of R14.6 billion (-1.1%), the revenue service said in a statement on Monday (1 April).
While the tax collector noted that these are preliminary results, which will be subject to detailed financial reconciliation and a final audit, the deficit will still be of concern.
South Africa has seen revenue collections fall consistently since 2015 due to weak economic growth and administrative weakness, the latter leading President Cyril Ramaphosa to fire Tom Moyane as revenue service boss in November, reports Reuters.
“The main sources of revenue that contributed to the R1 287.6 billion collected were Personal Income Tax (PIT), which contributed R493.8 billion (38.3%), Value-Added Tax (VAT) contributing R324.6 billion (25.2%), Company Income Tax (CIT), which contributed R214.7 billion (16.7%) and Customs duties contributed R55.2 billion (4.3%),” SARS said.
- Pay-A-You-Earn (PAYE) collections for the year grew by 7.0% to R477.4 billion, despite significant job losses, moderation in wage settlements and contraction in bonus payouts. However, this growth was dampened by lower share option pay-outs mainly from the finance sector, moderate public sector annual increases, job losses in the formal non-agricultural sector and lower bonus payouts in the finance sector;
- There was double-digit growth in Domestic Value-Added Tax (VAT) since May 2019 due to the benefits of the 1 percentage point increase in the VAT rate. This resulted in strong growth rates in both the large business and SMME segments of 9.8% and 14.8% respectively. For vendors who paid in both years for the relevant periods, Domestic VAT would have grown by 3.9% if there was no VAT rate increase, compared to 11.2% for that sample with the rate hike. That is why significant growth was achieved despite weak growth in retail trade sales, which continue to be under pressure. Full year collections yielded R378.8 billion of which 83.0% was received via the eFiling system;
- Company Income Tax (CIT) collections contracted by 2.5%, the contraction is on the back of a significant number of CIT refunds which were paid to the large business segment and relate to multiple periods that were under audit review, as well as the continued efforts to clear the IT credit book. Furthermore, the continuing power cuts imposed by the utility company also contributed to the decline as business activities and company operations were severely affected thus affecting their profitability;
- Growth in Personal Income Tax (PIT) provisional tax payments slowed from 37.5% in August 2018 to 18.4% in February 2019, mainly due to the non-repeat and/or lower declaration of capital gains compared to the previous year;
- There was strong growth in import taxes of 14.0% for the first three fiscal quarters, after which transactional data and merchandise imports did not meet expectations during some months of the final fiscal quarter. Payments that are part of the 13th deferment statement exceeded all expectations which resulted in the overall outcome for Customs growing at 13.9% which is marginally above the required growth rate.