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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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%).
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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:
“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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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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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:
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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