SARS warns South Africa’s tax base is under severe strain

South African Revenue Services (SARS) commissioner Edward Kieswetter has warned that South Africa’s job losses will have a significantly negative impact on the country’s tax base.

Speaking on the launch of the filing season on Thursday (1 July), Kieswetter said that the 32.6% unemployment rate was of great concern. This, combined with company closures, was anticipated to have an ‘immeasurable impact’ on the tax base, he said.

“While the impact of the third wave of Covid-19 on the economy is not yet fully understood and presents a downside risk, we will continue to observe and modify our outlook. However, for now, the tax revenue outlook for 2021-2022 remains positive.

Kieswetter said that SARS collection activities, which are integrally linked to the state of the economy, had also been severely hampered by the weight of lockdown restrictions.

“It will be felt. The economy has already begun to show encouraging signs of recovery after the impact of the pandemic, but we have a long way to go before we return to pre-Covid levels.”

Hopeful signs

Despite the crippling effects the Covid-19 pandemic continues to have on the country’s economy, Kieswetter says the tax revenue outlook for South Africa was hopeful after starting the year on a positive foot.

“The fiscal year 2021/22 began on a very positive footing, showing encouraging signs, albeit from a low base. The positive start to the financial year 2021/22 is reflective of continued economic performance in the period of January to March 2021.”

“We remain committed to safeguarding the public’s confidence in our tax administration system during these unprecedented times.

“Collectively we will ensure that the tax administration system of our republic continuously made accessible to allow taxpayers to fulfil the obligations and to ensure that the tax revenues due are collected.

He said the SARS effort on improving the overall ecosystem towards compliance and a tremendous focus on revenue recovery is also starting to yield promising fruit.

This was reflected in revenue for quarter one of its financial year to continue on the positive trend which was reported at the end of the last fiscal year.

“We are particularly encouraged by the shift in voluntary compliance from large businesses on the international segment and we will continue to work with and through our various stakeholders and intermediaries that represent those businesses in the SMME segment so that we can also improve voluntary compliance,” he said.

Read: South Africa’s tax season is now open – what you should know about lockdown and filing

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SARS warns South Africa’s tax base is under severe strain