On 03 April 2023, the Commissioner for South African Revenue Service (SARS) issued a media release which reads:
SARS is pleased to announce its preliminary revenue collection results for the 2022/2023 financial year, which reflect a significant growth trajectory over the past few years.
The revenue collected annually provides 90% of government funding, which indicates SARS’ vital role in providing the resources that government can use for the reconstruction and recovery of the South African economy, as well as contributing to the long-term prosperity of our nation.
As at midnight on 31 March 2023, SARS had collected a record gross amount of R2 067.8 billion. The net collection after payment of R381.1bn in refunds is R1 686.7bn. This is the first time since it was formed that SARS collected more than R2 068bn. The amount paid in refunds is also the largest ever paid since its formation.
The 2023 gross amount represents an increase of 9.7% over the 2022 collection of R1 884.9bn, while the refunds paid for 2023 are an increase of 18.7% over the 2022 amount of R321.1 billion. The 2023 net revenue collected represents a year-on-year increase of 7.9% over the net 2022 amount of R1 563.8bn.
As stated by the Minister of Finance, in his 2023 Budget Speech, “Our country is reaping the benefits of a more efficient and effective tax administration that is building trust to increase voluntary compliance and boost revenue collections.”
Compared to the 2022 revenue outcome, growth was recorded in all tax types. Personal income tax (PIT) grew 8.3% to R601.7bn, company income tax (CIT) grew by 7.6% to R348.0bn, Value-Added Tax (VAT) grew by 8.0% to R422.2bn and Customs and other taxes grew by 27.4% to R73.9bn.
Compliance revenue, resulting from targeted interventions across all segments of taxpayers, yielded R227bn in revenue, compared to last year’s figure of R215.4bn. These interventions focused on debt collection, criminal and illicit activities, and declaration compliance among large businesses amongst others.
Other gains this year include an increase in positive public sentiment, measured by a public opinion survey from 71.8% in 2021/22 to 76.5% in 2022/23.
The 2023 financial year-end results are an important indicator of SARS’ commitment to implementing its legal mandate of collecting all revenue due, promoting a culture of compliance and facilitating legitimate trade.
This mandate has been summed up in an important principle that guides the work of SARS, the ‘Higher Purpose’. This means that the revenue that SARS collects enables government to build a democratic state that fosters sustainable economic growth and social development in the interest and wellbeing of all South Africans.
In practical terms this means that government is able to pay old age grants, provide student financial aid, build clinics and schools and provide other basic services.
The journey of reimagining SARS has seen the establishment of a High Wealth Individual unit, and the reinstatement of the Large Business and International segments. This step has enabled SARS to provide an end-to-end segmented and customised service and compliance value proposition to individuals and large businesses. We are beginning to see the positive results in this space. SARS has collected R528.3bn in these two segments. We are pleased with the improved level of compliance and will continue with the work. Importantly, is increased focus on all areas of non-compliance, including base erosion and profit shifting as well as aggressive tax avoidance through complicated structuring of tax affairs by High Wealth Individuals and Multinational Entities.
In 2022/2023, SARS continued to refine its capability to detect and make it hard and costly for wilful non-compliant taxpayers. SARS continues to administer a permanent Voluntary Disclosure Programme (VDP) for qualifying individuals, companies, or trusts that seek to voluntarily disclose and regularise their tax affairs. In the 2022/2023 financial year, the VDP contributed R3.68bn (0.2%) to the preliminary gross revenue outcome.
Load-shedding is having a debilitating effect on the economy of our country and revenue collection. The constant electricity disruption is impacting the overall profitability and constrains normal lives and business growth. Equally important, load-shedding is also providing opportunities for sub-sectors involved in renewable energy. We are also seeing an increase in renewable energy-related imports, which benefits the fiscus.
As we start the new financial year, SARS will continue to explore all avenues of revenue collection. The ever-evolving world of work is presenting new opportunities. This changed environment was never anticipated when we designed products to respond to the challenges in the economy. Naturally, the enabling legislative framework will be amended to keep pace with this new environment. We are therefore, among others, refining our tools to cater for the Gig economy and other areas of the digital economy, including looking at the role of media influencers.
