The South African Revenue Service (SARS) has announced that it collected just over R2 trillion in gross tax revenues over the past year, which marks a 9.7% increase from the previous tax year. The gross revenues were R123 billion above the finance minister’s estimation in the 2022 Budget speech. This is the first time that SARS has exceeded the R2 trillion gross tax revenue mark, but it was R5 billion below SARS’s own revised estimate.
Edward Kieswetter, the Commissioner of SARS, expressed satisfaction with the results, stating that they have achieved what the finance minister had set out for them. Meanwhile, total tax refunds surged by almost 19% to more than R381 billion, with value-added tax (VAT) refunds increasing by almost 22% to R319 billion.
SARS attributed the refunds primarily to capital investments made by companies. While zero-rated exports drove the refunds, SARS also saw a significant increase in capital investment imports. For instance, companies in the mining sector invested in extending the life of their mines and increasing maintenance due to load shedding damage.
The mining sector, which had contributed to a tax collection windfall for SARS in the previous year, experienced a less buoyant year. Commodity exports were lower due to falling demand from China, and Transnet’s railing problems also hampered companies. Additionally, load shedding is affecting companies’ profitability, leading to a double whammy for SARS as it collects less corporate income tax from those affected while paying higher refunds.
As load shedding continues, SARS anticipates that corporate income tax will lag, with some smaller businesses struggling to cope. Furthermore, tax collection from fuel levies was affected by the National Treasury’s decision to temporarily reduce the general fuel levy last year.
Despite the challenges, SARS ended the year with R1.7 trillion in net tax revenue, a 7.9% increase from the previous tax year. However, SARS still ended up with a tax buoyancy of 1.36%, indicating that tax revenues in the country are growing faster than the GDP. The agency expects the first six months of the new tax year to be telling.
