The South African Revenue Service (SARS) says it welcomes the upwardly revised revenue collection estimate announced by Minister of Finance, Enoch Godongwana.
In his 2022 Budget Speech, the Minister increased the revenue estimate to R1 547.07 billion from the February 2021 budget estimate of R1 365.1 billion.
“The 2021/22 revenue yield is expected to result in the tax-to-GDP ratio reaching 24.7%, which is higher than the pre-COVID-19 level and that indicates that the extraction rate is on a positive trajectory,” said SARS on Wednesday.
The 2021/22 financial year revenue collections have been trending well above the estimated revenue, as set out in the 2021 Budget review and Medium Term Budget Policy Statement.
“Commodity prices have been thriving in the past few months and therefore, key SARS segments and regions have benefited from higher global demand for commodities. The extra income earned by commodity producing and exporting companies accompanied by SARS’ deliberate and targeted tax compliance work have resulted in a better than expected increase in tax revenue.”
SARS said it continues to make encouraging strides in compliance-related activities. There is a notable year-on-year increase of 18%.
“This comprises focused and deliberate work audits of large business, which has generated an additional revenue in excess of R4 billion. The Illicit Economic Unit has seen finalised investigations and conducted a number of search and seizures that have netted nearly R6 billion.
“While focusing on facilitating trade, we have also undertaken audit work that has realised above R5 billion. In light of the revised estimate by the Minister, this work will continue and be expanded.
“Pursuant to the above, our focus will also continue on a number of revenue generating priorities, which include the expansion of the use of data and intelligence to prevent leakages resulting from fraudulent VAT and PIT refunds claimed by syndicates operating within the tax ecosystem.
“Prominence is also on increasing capability to maximise debt collections; implementing the Davis Tax Committee recommendations on the key work streams to impact the corporate and High Wealth Individual compliance landscape; accelerating criminal investigations and counter illicit practices, and shaping the policy and approach on heightening revenue collections and service to the informal economy.”
The revenue service said the momentum of this compliance work will continue and accelerate.
“We are committed to enhancing our taxpayer service experience. It is critically important that we continue to provide a seamless service to taxpayers in order to assist them meet their legal obligations without any difficulty.”
As at 31 January 2022, SARS collected R1 252.2 billion, yielding a prior year growth of R275.1 billion (28.2%) and growth of R169.6 billion (15.7%) against 2019/20 collections.
The majority of collections against printed estimates show an upward trend, with the growth mainly driven by net corporate income tax (R91.4billion, 55.8%), net personal income tax (R30.5billion, 7.4%), and net value added tax (R15.0billion, 5.0%).
Collections of excise duties are recovering from the trade restrictions imposed due to the COVID-19 ban on sales, especially on alcohol, with companies now paying duties deferred during the pandemic.
The service said risks of higher inflation and tighter monetary policy, the evolution of the COVID-19 pandemic and delayed implementation of structural reforms remain.
Also, continued electricity supply constraints and high inflation – with a dire impact on consumer demand and disposable income – pose challenges on revenue collections.
“In the near term, commodity prices are expected to ease due to uncertainties in the global economy. Therefore, the outlook for CIT provisional tax for 2022/23 is likely to be lower than current levels as the commodity boom subsides.”
SARS said it is building and entrenching a culture of voluntary compliance, which is intrinsic to nation building and ensuring that all taxpayers pay their fair share.
SARS Commissioner Edward Kieswetter said: “We remain cautiously optimistic that we will meet the new revenue estimate. SARS will continue to work dutifully to fulfil its mandate of collecting all revenue that is due in order to build a capable State that serves the well-being of all South Africans. This is the privileged work that aligns to the higher purpose that SARS serves.”
Source: South African Government News Agency