SARS has broken two records for the 2022/23 financial year Photo Expatica
South Africa – The South African Revenue Service (SARS) announced they had broken two records for the 2022/23 financial year. They have collected R2 068 trillion and paid out R381 billion. This signifies a significant growth trajectory even during a deflated South Africa economy.
The 2023 gross amount of R2 068 trillion is 9.7% more than the R1.885 trillion. The net collection after payment of refunds is R1.68 trillion, an increase of 7.9% compared to the 2022 amount of R1 563 billion
The paid out R381 billion is 18.7% more than the R321 billion paid out in 2022. This equates to “almost 5% of GDP that has been put back into the economy,” said Johnstone Makhubu, SARS Chief Revenue Officer. SARS also saw a 1% increase in the compliance rate which is one of the factors for collecting a record breaking amount of tax.
SARS paying back the money
The growth is actually slightly below what SARS projected for the 2022/23 financial year. However, SARS has refunded more money than they thought they would have, said Makhubu, and this is why the projected growth wasn’t reached.
“We had taken a position that we will pay all refunds as they become due if they are legitimate. We were a little bit under focused in terms of what refunds we were going to pay and we saw ourselves paying in excess of what we projected. The projection would have been affected by an overpayment of refunds which we feel is the right thing to do.”
SARS made an agreement to pay out personal income tax within 72 hours, a covenant Makhubu feels they have largely kept up with. SARS have paid out around R36 billion in terms of personal income tax while collecting R602 billion (8.3% increase). Out of the R422 billion (8% increase) Value-Added Tax collected, they have paid back R318 billion in refunds. Around 85% of these claims have been paid in 21 days, said Makhubu. These quick refunds are essential to helping the economy grow.
Other taxes such as company income tax has grown by 7.6% to R348 billion while customs and other taxes have grown by 27.4% to R74 billion.
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Compliance and Edward Kieswetter has been key
The record breaking tax collection would not have been possible without a compliant database. Compliance has increased in every sector including large businesses whose compliance is up to 90%, said Makhubu.
“It points to the strategic decision made to reconstitute the large business and international segment. Pre 2018 that segment had been dismantled. Since Commissioner Kiewswetter came in, as a leadership team, we have taken a decision to reconstitute it. We are seeing steady improvement in compliance in that area.”
However, when it comes to small, medium and micro enterprises (SMMEs) there has only been a 68% compliance rate while they have contributed around R460 billion. The compliance rate for personal income tax from provisional taxpayers is at 52%. Although compliance rates have increased across the board, Makhubu said SARS will look into those sectors and see what needs to be done to increase the compliance rates. A recent survey has shown the public is looking at SARS more favourably. Positive public sentiment has increased to 76.5% from 71.8% in the previous year.
Makhubu has credited compliant taxpayers, the leadership of Edward Kieswetter, commissioner of SARS, and giving people the skills needed to do their job as the reasons for their record breaking financial year.
“The importance of strategic clarity has given the 12 500 employees at SARS a sense of direction. When commissioner Kieswetter came, he spoke about where we are going, what we are doing and creating a vision of a smart, modern SARS with unquestionable authority that is admired and trusted. It rallied everyone in the organisation to know where we are going. This strategic clarity has been quite crucial.”
To hear more from Johnstone Makhubu about SARS and how they function, listen to the podcast here:
