Despite sharp decline in company tax, Sars collects R1.7 trillion

Company income tax decreased sharply during the previous financial year, but Sars still managed to collect R1.7 trillion in revenue—R54.2 billion, or 3.2% more than in the preceding year.

According to the joint publication that reviews tax-revenue collection and tax-return information for the 2020 to 2024 tax years, as well as for the 2019/20 to 2023/24 fiscal years, total tax collection revenue increased from R113.8 billion in 1994/95 to R1 740.9 billion in 2023/24, at a compounded annual growth rate of 9.9% and an average tax-to-GDP ratio of 22.2%.

On 14 August 2024, the total value of trade facilitated by Sars for the 2023/24 financial year was R3.93 trillion, an increase of R21.9 billion, or 0.6%, since the previous year.

Since the inception of Sars in 1997/98, the tax administration collected more than R21.1 trillion for the country’s social and economic development, Treasury and Sars said in a joint statement on Tuesday.

In the 2023/24 fiscal year, Sars collected R2.2 trillion in gross tax revenue (R87 billion or 4.2% more than in the previous year), refunded taxes worth R413.9 billion (R32.8 billion or 8.6% more than in the previous year), and netted tax revenue amounting to R1 740.9 billion.

The statement also emphasises that Sars is determined to make it hard and costly for taxpayers who wilfully fail to meet their obligations. Compliance revenue secured from Sars’ focused activities and efforts yielded R260.5 billion for the 2023/24 year, which was R53 billion or 25.5% more than in the preceding year.

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Sharp decline in company income tax in 2023/24 – Sars

The tax statistics show that the 2023/24 financial year saw a sharp decline in company income tax revenue, particularly in the mining sector. According to the statement, this decline was mainly due to low commodity prices, which offset the revenue gains from the elevated commodity prices over the previous two years.

“In addition, weak global growth, persistent power outages, and logistical disruptions further weighed on the sector. Value-Added Tax (VAT) revenue growth remained subdued as consumers continued to face financial constraints due to high interest rates, which erodes disposable household income and expenditure.”

Statistics for company income tax showed that out of the 1 166 692 companies assessed by 31 August 2024 for the 2022 tax year, 20.7% declared a positive taxable income, 54.6% had taxable income equal to zero, and the remaining 24.7% reported an assessed loss.

Of the companies assessed, 549 were large companies (0.2% of the companies with positive taxable income) that each had taxable income of more than R200 million and were liable for 66.5% of the company income tax assessed.

The financial intermediation, insurance, real estate, and business services sector accounted for 266 262 (22.8%) of the assessed companies and was liable for 32.8% of the company income tax assessed, contributing the most among all the sectors.

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Personal income tax remained buoyant

However, personal income tax revenue remained buoyant, supported by a recovery in employment and earnings. By 31 March 2023, the personal income tax register had grown annually by 4.5% to 25.9 million individuals and by a further 4.3% to 27.1 million at the end of March 2024.

The number of individuals expected to submit income tax returns was 7.6 million for the 2023 tax year. Personal income tax, geographic, demographic, and other analyses of the assessments of the taxpayers who had been assessed by 9 September 2024 for the 2023 tax year showed that:

• 2 361 099 (35.5%) of assessed taxpayers were registered in Gauteng
• 855 274 (36.2%) of assessed taxpayers lived in the Johannesburg Metro and were taxed on an average taxable income of R484 672
• 1 775 779 (26.7%) of assessed taxpayers were between the ages of 35 and 44
• 3 495 942 (52.6%) of assessed taxpayers were male and 3 148 808 (47.4%) were female
• Assessed taxpayers reported an aggregated taxable income of R2.3 trillion and tax liability of R499.9 billion. The average tax rate was 21.3% compared to 21.5% in the previous tax year.

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VAT and customs duties

In 2023/24, 80.9% of the 488 118 active VAT vendors were companies and close corporations. These vendors contributed 93.2% to domestic VAT payments and received 92.2% of the VAT refunds paid. Although individuals (sole proprietors) made up 11.7% of active VAT vendors, they contributed 1.7% to domestic VAT payments and received 0.7% of the VAT refunds paid.

Import VAT accounted for 15.2% and customs duties for 4.1% of the year’s total tax revenue. In aggregate, these revenue sources accounted for 19.3% of total tax revenue, which was higher than the 17.7% average attained over the preceding five fiscal years. For the 2023/24 fiscal year:

• Import VAT was mainly collected from the import of machinery and electronics (28.9% versus 26.4% in 2022/23), chemical products (12.2% versus 13.8% in 2022/23), and vehicles, aircraft, and vessels (10.6% versus 11.2% in 2022/23).
• The largest contributors to customs duties were vehicles, aircraft, and vessels (26.1% versus 29.0% in 2022/23); textiles and clothing (15.9%, same as 2022/23); machinery and electronics (13.1% versus 12.3% in 2022/23); and food, beverages, and tobacco (13.0% versus 13.4% in 2022/23).