Budget speech: Sars welcomes estimated revenue collection of R1.846 trillion

The South African Revenue Services (Sars) welcomes the estimated R1.846 trillion revenue set for the 2024/25 Fiscal Year.

The estimation was announced by Finance Minister Enoch Godongwana on Wednesday in Cape Town while delivering the budget speech.

The figures announced are an increase from the R1.841 trillion announced in last year’s medium-term budget policy statement (MTBPS).

“The revised revenue estimate is an improvement from the October 2024 estimate and reduces the shortfall against the February 2024 estimate set at R1.863 trillion, from R22.3 billion to R16.7 billion,” said the taxman.

Revenue to lift the tax-to-GDP

Sars commissioner Edward Keiswetter said the projected revenue performance will lift the tax-to-GDP ratio slightly to 24.7% in FY2024/25, compared to 24.5% in FY2023/24. 

The tax buoyancy ratio has improved to 1.12 from 0.66 in prior years.

“At the core of what Sars is doing is the steadfast pursuit of its mandate that emphasises revenue collection, compliance enhancement and the facilitation of legitimate trade.

“The approach involves analysing how economic trends and tax and customs policies affect revenue collections. 

“By implementing its compliance programme effectively, Sars is better positioned to collect all revenue due to the fiscus. The ongoing investment in Sars is essential to ensure effective tax administration.”

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How to achieve revised revenue collection

Kieswetter said to achieve the revised estimate of R1.846 trillion, they will continue to enhance their approach to tax collection that involves enhancing compliance measures.

The taxman will also continue to employ advanced data analytics, machine-learning algorithms, and artificial intelligence, to improve service to taxpayers, whilst improving its capability to detect and respond to general non-compliance and serious tax crime.

“The new net revenue estimate for FY 2025/2026 is R2.006 trillion.

“The revenue estimate comes against the backdrop of an economic outlook that is challenging both globally and domestically.

“The new net revenue contains a combination of several new policy measures, including a small increase in VAT, as well as a continued focus on administrative efficiencies.”

Employment taxes

He added that overall employment and consumption taxes have and are expected to perform strongly towards the end of the 2024/25 financial year whilst import taxes and fuel levies are expected to underperform.

While corporate taxes have grown positively except for mining corporate taxes that continue to underperform due to declining volumes and prices coupled with challenges in the networked logistics sector. 

“Employment taxes were initially projected to grow year on year by 13.8% to attain the Printed Estimate. This was based on an assumption that the wage bill would grow by 8.4%.”

At MTBPS 2024, the wage bill estimate was lowered to 5.5%, and consequently the MTBPS estimate for PAYE being adjusted downwards, now requiring year on year growth of 12.4%.

“The lower-than-expected growth in wages, and subsequent adverse impact on personal income taxes, was offset by the higher than estimated tax from pension fund withdrawals as well as a year-on-year growth in compliance revenue.”

Value-added tax

Keiswetter said domestic VAT, which was projected to grow at a rate of 7.1% in the 2024 budget, has steadily maintained its growth projection.

This is due to decreasing interest rates, lower inflation and interest rates, as well as withdrawals from pension funds, all of which boosted disposable income, and funding consumption. 

“Import VAT, on the other hand, is down because imports are down.

“By the end of quarter 3 of 2024, the actual import contraction was 1.3%, compared to a projected growth of 3.8% at the time of the MTBS. This has reduced import VAT by R4.3 billion year-on-year after refunds of R280.5 billion.”

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Fuel levy

When it comes to the fuel levy, he said it has also adversely influenced revenue collection.

In the 2024 budget, the fuel-levy collection was estimated at R95.8 billion, and this was revised downward in the MTBPS to R82.4 billion, based on lower than estimated consumption.

“Fuel consumption as at February 2025 was 21 billion litres compared to 24 billion in the prior year, due to increased energy availability.

“Settlement of significant refunds of prior years has further reduced fuel levy.  It is now projected to end at only R80.6 billion, or R15.2 billion lower than originally estimated.

Refunds

“Sars remains firmly committed to making its contribution to foster an environment that support and stimulate economic growth.

“Overall, as at 28 February 2025, tax collection yielded a net revenue of R1.661 trillion, from R2.074 trillion gross revenue collections and R413.3 billion total refund payments,” he added.

In the same period, VAT refund payments were R338 billion reflecting growth of R21.3 billion (6.7%) from the previous financial year.

The growth in VAT refunds was driven by VAT credit returns submitted (in liability value) in relation to increased input tax declared.

Address the tax gap

“Whilst we have seen encouraging progress at Sars, we remain painfully aware that much more has to be done to address the tax gap and in particular modernise Sars to respond to illicit economic activities and tax crime, aggressive tax planning, and many other instances of non-compliance.

“All these means that there are vast amounts of tax revenues that remain uncollected. Our efforts in this regard has to be stepped up with determination and unyielding focus.”

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