Sars rakes in R1 trillion in tax
04 April 2016
Posted by: Author: TechCentral
The South African Revenue Services has never collected more than a trillion rand in taxes before - until now.
"Gross tax revenue for the fiscal year came in at R1,0699 trillion or R0,2bn more than the February estimate,” Sars commissioner Tom Moyane announced on Friday.
This is growth of 8,5 % in total revenue from 2014/2015 and surpasses the R1,0697 trillion target set by finance minister Pravin Gordhan in this year’s budget speech.
"Key to this accomplishment is the enhancement of our operating model, which has started transforming Sars into an organisation that is adapting to a changing global environment and refocusing on the execution of its mandate — that of collecting all revenue that is due to the fiscus,” Sars said in a statement.
Sars pointed out that it was forced to "think outside the box” and find innovative and creative ways of collecting the revenue, given the headwinds faced by the global economy and the downward revisions to the South African economic outlook.
"This year, revenue realisation was made even more difficult given significantly declining consumption, constrained further by an interest rate hike cycle and deteriorating business confidence. The declining currency exchange rate provided real challenges to foreign business exposure,” Sars stated.
It added that special revenue initiatives included optimal use of resources, increased integration between business units to promote cross-functionality and reduced duplication. "This provided significant efficiencies which in turn realised additional revenue to the fiscus,” the agency said.
The four main revenue contributors for 2015/16 were:
- Personal income tax (PIT): Total collections were R389,3bn. This is R35,3bn (10%) higher than the R353,9bn outcome of the previous financial year.
- Corporate income tax (CIT): Total collections were R193,5bn. This is R6,9bn (3,7%) higher than the R186,6bn outcome of the previous financial year.
- VAT: Total VAT collections were R280,8bn. This is R19,5bn (7,4%) higher than the R261,3bn outcome of the previous financial year.
- Customs and excise duties: Total customs and excise duties were R151,8bn. This is R15,2bn (11,1%) higher than the R136,7bn outcome of the previous financial year.
Overall, the financial sector contributed 49,7% of total tax revenue collected and is the highest contributor to all major tax types. This is followed by community, social and personal services at 14,9% and the manufacturing sector at 11,2%.
The community, social and personal services sector is strong in pay-as-you-earn or PAYE, driven by the high government bill. The manufacturing sector falls within the top three sectors in all major tax types.
The small business sector provided the largest share of revenue, with 68% compared to 32% from large businesses. The increased focus on enhancing compliance in the SMME sector resulted in a 13,1% year-on-year growth in revenue, mainly as a result of poor trading environment.
Collections from large businesses contracted year-on-year by R0,7bn (0,2%). Large business showed signs of distress, due to global economic pressures, including suppressed demand from trading partners like China and the European Union as well as the volatile exchange rate and a decline in the price of oil and resources.
PAYE growth against the previous year was R31,7bn (9,2%), slowing significantly in the final quarter of this financial year.
CIT provisional tax payments contracted in both the mining and quarrying, and manufacturing sectors by R3,8bn (31,4%) and R2,2bn (5,5%) respectively.
Domestic VAT was negatively affected by poor consumption levels and the contraction of R2,4bn (5,2%) mainly from the manufacturing sector. This is in contrast with a five-year average growth of 6,4%.
This article first appeared on techcentral.co.za.