The South African Revenue Service (SARS) has accepted the challenge put forward by the minister of finance Enoch Godongwana, in his latest Medium-Term Budget Policy Statement (MTBPS) to collect even more taxes.
Godongwana said that revenue collection estimates for SARS have increased, with the taxman now expected to collect R1,682 billion this year – up R84 billion from the February Budget.
SARS is central to tax revenue collections in the country and allows for adequate fiscal space to attend to social and investment spending priorities while keeping an eye on debt service costs.
According to SARS, it provides about 90% of all government revenue, which makes the increase in tax collection estimates significant.
“As SARS, we accept the challenge of the revised higher revenue estimate. While the revised revenue estimate is steep, we are committed to act according to what is permissible in law to meet this challenge,” said the commissioner of SARS, Edward Kieswetter.
SARS said that it is rebuilding itself and laying a firm foundation for more tax collection based on data-driven insights; enabling technology and infrastructure; and employing skilled staff who are all indispensable.
“We are equally committed to counter criminal and illicit activity.” SARS is also currently aligning itself with recent findings of the Zondo Commission on state capture.
Customs valuation fraud, excise under-declaration, and syndicated tax crimes, including illicit activities and interventions linked to cases relating to state capture, will remain major areas of focus, said Kieswetter.
According to the revenue service, gross tax revenues are expected to exceed the estimates presented:
- Corporate income tax is expected to account for R62.8 billion;
- Stronger personal income tax collections are expected to bring in R8.2 billion.
Nwabisa Ruka, director of tax and legal at Deloitte Africa, said that there has been a shift at SARS, with Godongwana’s mid-term budget giving no indication of taxes being increased in the near future.
Instead, she said, SARS is focussing on tax compliance to increase revenue collection rather than tax increases.
The R92 billion in increased tax revenue seen in 2022 so far is directly linked to work from SARS to increase tax compliance.
But Kieswetter cautioned that while the tax revenue looks higher, it still has to be collected and is not in the bank yet.
He said the two industries which helped to increase tax revenue are finance and manufacturing. Although mining helped to bolster coffers last year, there is a declining contribution this year.
Even with lower taxes from the mining sector, Kieswetter expects the gross operating surplus to continue for the rest of the year. “If that pans out, we will see a 22% upward collection,” he said.
“SARS is continuing to improve the efficiency in tax revenue administration through targeted strategic compliance and enforcement interventions to achieve higher taxpayer compliance ratios,” said Kieswetter.
“While the performance of the economy is important for revenue collection, SARS’ initiatives have counterbalanced the negative impact of the local and global economy.”
“SARS compliance efforts have contributed 12% to the net revenues collected,” he said.
The revenue service’s compliance efforts are focused on the following areas:
- Debt cash collections;
- Curbing impermissible and fraudulent refunds claims;
- Voluntary disclosure management;
- Countering syndicated tax;
- Countering customs crime;
- Taking on valuation fraud and;
- Addressing customs seizures.
Administrative efforts by the taxman have already resulted in, to name a few, R28 billion of fraudulent refund claims and R8.4 billion from provisional tax payments with the help of specialised teams.
Kieswetter said SARS would continue to make it hard and costly for taxpayers and traders who wilfully remain non-compliant.