SARS commits to achieving higher revenue estimate

The South African Revenue Service (SARS) has welcomed Finance Minister Enoch Godongwana emphasis on ensuring that government finances are spent in an equitable, efficient and flexible manner to support South Africa’s development objectives.

This comes after the Minister tabled the Medium Term Budget Policy Statement on 26 October 2022, in Cape Town. The Minister’s policy message focused on strengthening South Africa’s fiscal integrity over the medium term through managing the country’s finances with prudence.

In a statement, SARS said its work is central in that efficient tax revenue collections contribute to the fiscal space required to attend to important social and investment spending priorities, whilst keeping an eye on debt service costs.

Revised revenue estimate

The Minister increased the revenue collection estimate that SARS must collect to R1 682 billion from R1 598 billion. SARS provides about 90% of all government revenue, which makes this increase in the revenue to be collected by SARS very 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 by law to meet this challenge.

“The rebuilding of SARS is evident in improved revenue collection. We are laying a firm foundation for this new environment, which is the synthesis of data-driven insights, enabling information and technology infrastructure and employing skilled staff, which are all indispensable for the success of this modernisation journey. We are equally committed to counter criminal and illicit activities,” SARS Commissioner Edward Kieswetter said.

Gross tax revenues are expected to exceed the estimates presented at the time of the 2022 Budget by R83.5 billion in 2022/23, of which corporate income tax is expected to account for R62.8 billion.

SARS said stronger personal income tax collections are expected to bring in an additional R8.2 billion relative to the 2022 Budget Review projections.

South Africa’s gross domestic product is expected to grow by 1.9% in 2022 from 4.9% in 2021. Revenue collections, as at 30 September 2022, amounted to R784.8 billion, yielding growth of R64.7 billion (9.0%) against prior year collections of R751.0 billion.

“All collections against the previous year showed an upward trend except for the fuel levy, which recorded a contraction of R9.1 billion (-20.9%). The year-to-date growth was partially offset by the total

refunds paid out, which were R32.5 billion (20.9%) higher than the previous year, with value-added tax refunds R26.2 billion (21.0%) higher in the first half of the year.

“During the Budget Speech presentation in February

2022, tax revenues were expected to grow by 3.3% (R1.547 billion to R1.598 billion). SARS is continuing to improve the efficiency in tax revenue administration through targeted strategic compliance and enforcement interventions to achieve higher taxpayer compliance ratios.”

Kieswetter said 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. This is in line with our revenue management philosophy, which has seen our efforts result in an additional R92.5 billion that has been added to the total revenue of R784 billion collected to date.

“Included in the compliance efforts are areas that relate to debt cash collections, curbing impermissible and fraudulent refunds claims, voluntary disclosure management, countering syndicated tax and customs crimes as well as valuation fraud and customs seizures.”

To illustrate the point, the Commissioner said that SARS's administrative efforts undertaken in the current financial year to drive compliance revenue include:

• 831 797 debt cases and

186 691 final demands being issued and successfully pursued, resulting in R35.2 billion being collected.

• SARS prevented R28 billion of impermissible and fraudulent refund claims from being processed.

• The setting up specialised teams that assessed the accuracy of provisional tax payments, resulting in R8.4 billion being collected.

• Over 2 675 customs interventions resulting in R1.2 billion being collected.

• SARS's work in the areas of syndicated tax and customs crimes is gaining traction, resulting in R1.9 billion being collected.

• One preservation order was obtained for the value of

R150 million.

• The estimated value of assets under preservation orders is about R2.9 billion.

• The liquidation and sequestration of assets to the value of about R2.3 billion has been carried out.

• SARS also conducted 478 Illicit trade interventions, resulting in 403 detentions and 252 seizures.

Improving services

Kieswetter said SARS will continue to improve its service to taxpayers and traders by providing clarity and certainty to enable them to meet their legal obligations, and by making it hard and costly for taxpayers and traders who wilfully remain non-compliant.

Customs valuation fraud, excise under-declaration, syndicated tax crimes, including illicit activities and interventions linked to cases relating to state capture will remain major areas of focus.

SARS encouraged taxpayers to use the Voluntary Disclosure Programme to regularise their tax affairs. However, taxpayers must voluntarily disclose any irregularities to SARS, as the programme will not be available once SARS discovers on its own such non-compliance.

In this regard, the revenue authority will be communicating more details on how to access this programme. SARS is on course to further improve its revenue performance in alignment with its vision 2020 – 2025 and the Strategic Intent of Voluntary Compliance.

“In view of the above opportunities, and the increased trust that taxpayers and traders have in SARS, we believe that our work and increased focus on our mandate objectives will ensure the attainment of the revenue projections as communicated by the Minister,” said Kieswetter.

“SARS initiatives have counterbalanced

the negative impact of the local and global

economy.”