SARS Sets New Record with R2.1 Trillion Tax Collection Amidst Increased Compliance and Fraud Concerns

In an unprecedented triumph for the South African economy, the South African Revenue Service (SARS) has announced the collection of a staggering R2.155 trillion in gross taxes for the 2023/24 financial year—surpassing its own revised estimates by nearly R10 billion. This feat marks a notable 4.2% growth against the country's nominal GDP, reflecting SARS's fortified efforts in improving tax compliance and collection systems.

SARS Commissioner Edward Kieswetter revealed that the record revenue includes the highest quantum of refunds ever paid out by the agency—totaling R414 billion—an 8.6% increase compared to the previous financial year. The net amount collected consequently stands at an imposing R1.741 trillion, R54 billion more than the preceding year, signaling robust economic momentum.

Indeed, Kieswetter underscored the economic impact of such sizable refunds, notably a 7.5% growth in VAT refunds, with R120 billion and R37 billion benefitting SMMEs and individual taxpayers, respectively. In a period when businesses and consumers are struggling with cash flow, these refunds serve as an essential lifeline. Nonetheless, concerns over refund fraud have been accentuated by SARS's interdiction of R101 billion in illegitimate claims—an issue Kieswetter vows to monitor closely.

The year saw a surge in personal income tax revenue by R49.5 billion, or 8.2%, buoyed by improved employment rates and wage settlements. Contrastingly, net corporate income tax witnessed a downturn, experiencing a R31 billion contraction, with the mining sector significantly trailing the previous year by 49.0%. Notably, while large business contributions slid by 17.5%, the small business sector's contribution swelled by 8.8%.

Integral to this revenue upsurge is SARS's resolute compliance program, which has retrieved R293.7 billion, up by a remarkable 26.7% from the last year. Utilizing a sophisticated blend of data analytics, AI, and machine learning, SARS has honed its ability to curb criminality and non-compliance without obstructing rightful refunds.

The program has reclaimed R91.3 billion from millions of cases, extracting R420 million tied to nearly 900,000 pending returns. Additionally, the voluntary disclosure initiative has seen 1,435 applications, accruing R3.5 billion. Over R19.3 billion has been collected from more than 28,000 cases of underpaid taxes by provisional taxpayers, entrenching the financial integrity of the nation's tax system.

Since its establishment in 1997, SARS has amassed over R21.6 trillion in net tax revenues, indicating a hearty compound annual growth of 9.9%, and has played an integral role in fortifying South African democracy and public welfare.

However, Kieswetter has laid bare an emerging challenge: the transgression of tax practitioners. SARS has initiated stringent measures, including the revocation of over 50 licences due to compliance issues, with further criminal investigations into several practitioners underway. This reiterates SARS's commitment to preserving a scrupulous tax environment.

With eyes focused on ongoing compliance and safeguarding against fraud, SARS's record-breaking tax collection stands as a testament to South Africa's fiscal resilience and the agency's steadfast pursuit of a fair tax system.