Paye, corporate tax, VAT on hold

MEDIUM-TERM BUDGET: UNLESS EMERGENCY ARISES

Sars to ensure future refunds are paid out within 21 working days.

lower revenue outcomes and that the budget environment was “very tight”.

Revenue collection was relatively buoyant in the first half of 2018/19, growing by 10,7% yearon-year, but the recession has started to weigh on collections.

“Weaker economic growth, alongside a once-off payment of overdue VAT refunds, will result in an in-year revenue shortfall now estimated at R27.4 billion, relative to the 2018 Budget estimate,” Treasury said.

A backlog of VAT refunds at the South African Revenue Service (Sars) and an underestimation of refunds due had led to an excessively optimistic view of revenue growth. The VAT refund estimate has been revised upwards by R9 billion, and about R11 billion would be paid out to clear the backlog in the VAT credit book. The remaining R7.4 billion of the shortfall is the result of slower corporate income tax collections.

The tax ombudsman’s investigation in 2017 found that Sars unduly delayed payment in some instances. “In future, Sars will ensure all refunds from correctly completed VAT returns are paid within 21 working days,” Treasury said.

Graph below shows refunds owed to registered VAT vendors.