Sars collects R1.741 trillion in tax, R10 billion more than estimated

Sars has collected a record amount of tax in the 2023/2024 tax year, but remains concerned about fraud and abuse of the tax system.

By the end of March 2024 Sars collected R1.741 trillion in tax for the 2023/2024 fiscal year, which was R10 billion more than the revised estimate and R54 billion more than last year’s R 1.687 trillion, despite the tough prevailing economic conditions.

Edward Kieswetter, the Sars commissioner, announced the preliminary revenue collection outcome in Pretoria on Tuesday. By the end of March, Sars collected a record gross amount of R2.155 trillion and paid out refunds of R414 billion to taxpayers, the highest amount yet in refunds compared to R381 billion in the previous year. Sars paid out R343 billion in VAT refunds.

Total refunds this year represent about 6% of gross domestic product (GDP) and Kieswetter says he is pleased that R120 billion was paid out to SMMEs and R37 billion to individual tax payers, as this is good when business and individuals are cash strapped.  

“While we are pleased that the R414 billion was returned to taxpayers as this is good for the economy, I remain concerned about the refund fraud and abuse,” Kieswetter says. In the period under review, Sars prevented the outflow of R101 billion of impermissible refunds.

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Increase in total tax revenue

Compared to the 2022/2023 fiscal year, total tax revenue increased by R54.2 billion (3.2%), driven by personal income taxes of R49.5 billion (8.2%) on the back of higher than estimated compensation of employees, as well as higher domestic VAT of R39.3 billion (8.1%).

  • Net Personal Income Tax, which accounts for 37.3% of total revenue, grew by R49.5 billion (8.2%) in 2023/2024, as employment improved year-on-year and average wage settlement rates improved from an annual average of 6.0% in 2022 to 6.3% in 2023. PAYE collections from incentives and bonus payments, predominantly from the finance sector, also boosted revenue.
  • Net Corporate Income Tax, on the other hand, contracted by R31 billion (-8.9%) in 2023/2024, while the mining sector saw a decline R42 billion. The company tax contribution of large businesses contracted 17.5%, while the contribution from small businesses increased 8.8%. Company income tax collections accounted for 18.0% of total revenue.
  • Net Value-added Tax (VAT) grew by R25.4 billion (6.0%), largely thanks to domestic VAT that increased by R39 billion (8.1%), import VAT that increased by R10.0 billion (3.9%) and higher outflow of VAT Refunds of R23.9 billion (7.5%).

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Compliance programme contributes R293.7 billion

Kieswetter says Sars is determined to make it hard and costly for taxpayers who wilfully fail to meet their obligations. During the past tax year, the Sars compliance programme contributed R293.7 billion, an increase of R61.9 billion (26.7%) from the previous year’s R231.8 billion.

The Compliance Programme uses data, artificial intelligence and machine learning algorithms to successfully counter criminality and wilful non-compliance. These systems also ensure that no legitimate refunds are denied, while preventing impermissible and fraudulent refunds.

Examples of the successes of the Compliance Programme include:

  • R91.3 billion debt collected from 2.6 million cases, including R420 million from 895 000 outstanding returns.
  • Voluntary Disclosures contributed R3.5 billion made up of 1 435 concluded applications.
  • Where provisional taxpayers underpaid their taxes, Sars collected R19.3 billion from over 28 000 cases from large businesses, Individuals and SMMEs.
  • The Specialised Audits and Investigations unit prevented revenue leakage of R5.7 billion, while audits from the large business and international segment contributed R23 billion from 341 cases.
  • The Investigations of Syndicates Crimes contributed R20.1 billion and executed 147 preliminary investigations made up of preservation orders and collapsing one tobacco and gold Illicit financial flow scheme.
  • Sars completed 230 000 Customs Compliance Inspections and Interventions compared to 235 000 inspections the year before, raised a total of R8.4 billion in customs related assessments and collected outstanding debt totalling R2 billion. Sars also curbed impermissible claims related to the VAT Export Incentive Scheme totalling R92 million and completed 6 550 customs seizures totalling R6.6 billion.
  • Sars undertook detailed work through the management of risk, consisting of revenue leakage prevention, fraud, impermissible refunds and debt equalization that contributed R101 billion from 1.8 million cases.

“However, we remain concerned as the refund risk remains stubbornly high, but Sars will continue its efforts to manage this,” Kieswetter says.

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Sars successes in court

He says Sars is also making significant inroads in its litigation strategy which resonates with its strategic objective to provide certainty and clarity for taxpayers ensuring proper interpretation of tax or customs laws.

In the year under review, 110 judgments were handed down and Sars was successful in 94 of them, a success rate of 84%. Sars also conducted 871 criminal investigations dealing with Income tax, VAT and PAYE and 294 were handed to NPA. Of these, 85 cases where finalised securing guilty verdict with direct imprisonment sentences totalling 49 years to be served, four acquittals and a conviction rate of 95%.

Kieswetter points out that more than five years ago, state capture left Sars in distress and severely compromised.

“We embarked on a journey to re-imagine the organisation. Sars is succeeding in its strategic intent of building a tax and customs system based on voluntary compliance and sharpening its capability aimed at detection and deterrence of wilful non-compliance.”

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Rebuilding Sars after state capture

He says rebuilding Sars entailed broadening the tax base, instilling and improving a culture of voluntary compliance and fiscal citizenship and seamless intersection of people, data and technology to optimally deliver on Sars’ mandate, as well as working with all stakeholders in the tax ecosystem and fostering trust and confidence in Sars. Some of the positive results include:

  • The tax register grew by 411 000 companies, with 1 500 contributing R214 million in gross revenue
  • 39 900 new employers voluntary registered for PAYE, with 19 000 contributing R2.7 billion in additional tax, totalling R3.4 billion
  • The tax register grew by 57 700 new VAT vendors, with 14 200 contributing R4.4 billion in gross revenue
  • The tax register grew by 1.1 million individuals.

Kieswetter says since its inception in 1997, Sars collected R21.6 trillion in net tax revenue. Tax revenue collections increased from R114 billion in 1994/1995, at a compounded annual growth rate of 9.9% and an average tax-to-GDP ratio of 22.2%.

“To put this in perspective, our collections over the last four business days this fiscal year amounted to R114 billion or the total collected in 1995 for the entire year.”

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