South Africa Collects R2.155 Trillion Tax Revenue Despite Economic Woes

Despite ongoing challenges such as load shedding and disruptions in port and logistics operations, the South African Revenue Service (SARS) disclosed it had collected R2.155 trillion in gross tax revenue for the 2023-24 financial year.

Total tax revenue increased by R54.2 billion (3.2%) versus 2022/23 fiscal year, driven by personal income taxes of R49.5 billion (8.2% year on year or y/y) on the back of higher than estimated compensation of employees, as well as higher domestic VAT of R39.3 billion (8.1% y/y).

During a media briefing on the preliminary revenue outcome, SARS Commissioner Edward Kieswetter said that the amount aligns with the revised estimate, marking a year-on-year growth of 4.2% versus a nominal gross domestic product (GDP) of 4.9%.

"Net revenue, which is the revenue after refunds have been paid to tax payers amounts to R1.741 trillion, which exceeds the revised estimate set by the Minister of Finance by some R10 billion, representing a year-on-year growth of 3.2% (or R54.2billion) more than last year," he said, SA News reported.

He added, "This revenue performance translates to a tax-to-GDP ratio of 24.7% and a provisional tax buoyance ratio of 0.9% at gross level and 0.7% at net revenues."

The revenue service issued refunds to taxpayers amounted to R414 billion, reflecting a 6% year-on-year increase, marking the highest amount of refunds ever paid out by SARS. This figure increased by R33 billion from the previous year. Additionally, VAT refunds reached R343 billion, indicating a growth of 7.5% compared to the previous year.

It's worth noting that these refunds represent approximately 6% of GDP. Hence, it is pleasing that R120 billion of these refunds were allocated to Small, Medium, and Micro Enterprises (SMMEs), with an additional R37 billion directed to individuals.

"This is good for when businesses and individuals remain cash-strapped. Refunds are often a form of funding during troubled times," he said. "Whilst we are pleased that the R414 billion returned into the hands of taxpayers is good for the economy, I remain concerned about fraud and abuse of our refund system."

During the review period, SARS successfully prevented the outflow of R101 billion in impermissible or fraudulent refunds and achieved several successful prosecutions, as per Kieswetter.

SARS Customs also facilitated a total of R8.5 million in trade transactions, totaling R3.96 trillion. Exports accounted for just over R2 trillion while imports amounted to R1.937 trillion, resulting in a trade balance surplus of R11 billion.

The commissioner said their program for Authorized Economic Operators (AEO), designed to offer accredited traders a green lane experience while maintaining high compliance standards, welcomed 145 new licensees this year, increasing the total number to 304 AEOs.

Since its inception in 1997, SARS has collected R21.6 trillion in net tax revenues.