Edward Kieswetter’s R450 billion ‘gift’ to taxpayers

The South African Revenue Service (SARS) collected more tax revenue than expected in the 2024/25 financial year, surpassing budget estimates by R9 billion.

SARS published its preliminary collection outcomes on Tuesday (1 April), reporting that it had collected R2.303 trillion by the end of March 2025.

This is 6.9% higher than the year before and higher than the 5.4% growth in nominal GDP.

SARS said it also increased refunds for the year, paying out R448 billion to taxpayers—the highest-ever amount and up 8.2% from the R414 billion paid out last year.

This brings the collected net amount to R1.855 trillion, which is almost R8.8 billion higher than the revised estimate in the 2025 Budget and R114.0 billion more than last year’s R1.741 trillion.

The National Treasury has a revenue estimate of R2.006 trillion for 2025/26.

SARS commissioner Edward Kieswetter said that the nearly R450 billion given back to taxpayers is good for the economy but expressed concerns about refund fraud and abuse.

In the period under review, SARS prevented the outflow of R147 billion of impermissible refunds.

According to SARS, the preliminary revenue collection represents a substantial tax-to-GDP ratio of 24.8%, reflecting the country’s fiscal health and efficiency in revenue generation.

Moreover, the tax-buoyancy ratio for the fiscal year 2024/25 was estimated at 1.20, indicating the robust response of tax revenue relative to economic growth.

“This buoyancy ratio underscores the government’s capacity to adapt its revenue-collection strategies to the dynamic economic environment, ensuring sustained fiscal stability and growth,” the service said.

SARS noted there has been a notable shift in revenue streams, influenced by a combination of market dynamics, trade patterns, and consumer behaviour.

For example, nominal GDP was expected to grow at 5.7% at Budget 2024 and adjusted to 6.1% midway through 2024/25.

At Budget 2025, however, the outlook had been reduced to 5.4%.

The growth of some indicators, such as the wage bill, final household expenditure, imports, and exports were forecasted to fall during the year, whereas the estimates for gross operating surplus improved.

Where the tax is coming from

Net personal income tax (PIT) including interest was estimated to grow at 13.8% at Budget 2024; 12.3% at MTBPS; and 12.9% at Budget 2025.

Net PIT ultimately grew by R81.8 billion (12.6%), which could be partly attributed to above-inflation growth in the Finance and Community sectors’ pay-as-you-earn (PAYE), as well as the gains from Two-Pot withdrawals.

The Two-Pot directives were valued at R12.9 billion for the year-to-date, compared to the projected estimate of R5.0 billion (R7.9 billion more).

SARS said there has been a noticeable improvement in PAYE tax compliance, as indicated by the Voluntary Compliance Index, which rose by 0.38 percentage points from the previous year’s 75.10% (2024/25) to 75.48%.

The assumption for net corporate income tax (CIT) was -3.3% at Budget 2024; 0.4% at MTBPS; and 1.1% at Budget 2025.

Net CIT grew by R6.5 billion (2.1%), driven by CIT Provisional Tax collections of R323.3 billion, which were R10.5 billion (3.3%) higher than in the prior year, and exceeded the Budget 2025 estimate by (R4.3 billion, 1.4%).

The growth was mainly due to the Finance sector, which was buoyed by improved profits, whereas the Mining sector continued to contract.

The CIT Voluntary Compliance Index rose by 3.2 percentage points from the previous year’s 48.43% (2024/25) to 51.66% (February 2025), with notable improvements in filing compliance.

Net VAT, which contributed 24.7% of total collections, grew by R10.5 billion (2.3%).

The assumption for VAT refunds was growth of 7.6% at Budget 2024; 6.7% at MTBPS; and 7.2% at Budget 2025.

At the end of March 2025, VAT Refunds amounting to R365.5 billion were disbursed, with year-on-year growth of R22.5 billion (6.6%).

The top three refunded sectors were Mining, Finance, and Manufacturing.

Preliminary indications are that SARS’s efforts avoided leakage worth R74.0 billion (R60.7 billion avoided in 2023/24), predominantly thanks to syndicated crime investigations, investigative audits, and tax verifications.

SARS is coming after tax dodgers

While SARS is touting its highest refunds on record and its capacity to stop ‘leaks’ in the revenue bucket, it is also making a more focused effort to collect taxes.

SARS and Kieswetter have also frequently mentioned the approximately R500 billion that remains uncollected by taxpayers, including billions owed by thousands of millionaires.

The group believes taxpayers are honest and want to be “helped” to meet their tax obligations.

In this respect, it is trying to make it easier and simpler for taxpayers to transact with the organisation by providing clarity and certainty.

However, when taxpayers wilfully abdicate their legal obligation, SARS makes it hard and costly for them.

The Revenue Service said it is using technology such as data science, artificial intelligence, and machine-learning algorithms to counter criminality and wilful non-compliance.

“These systems also ensure that no legitimate refunds are denied, while preventing impermissible and fraudulent refunds,” it said.

To this end, it noted that SARS Compliance Programme interventions generated R301.5 billion in compliance revenue, marking a 15.8% year-on-year increase.

A portion of this revenue, R154.8 billion, could be attributed to cash-collection initiatives. Strategies to prevent revenue leakage contributed another R146.7 billion.