The South African Revenue Service (SARS) has announced that it collected a record R1.564 trillion in tax revenue in the 2021/2022 financial year.
In a media briefing on Friday (1 April), SARS Commissioner Edward Kieswetter said the main contributors to the record figure were personal income tax (PIT), Value-Added Tax (VAT), Company Income Tax (CIT) and customs duties.
SARS hits tax revenue record
“For the period ending 31 March 2022, SARS collected a gross amount of R1 884.9 billion (R1 540.5 billion in the prior year). Offset by refunds of R321.1 billion (R290.7 billion in the prior year), this results in net collections of R1 563.8 billion, which represented a surplus of R314.0 billion (25.1%) against the prior year 2020/21,” Kieswetter said.
“Measured against the Budget Estimate of R1 547.1 billion, this results in a surplus of R16.7 billion (1.1%).”
Of the total revenue collected, PIT contributed R555.8 billion (35.5%), VAT R390.7 billion (25.0%), CIT R323.6 billion (20.7%) and customs duties R58 billion (3.7%). SARS however cautioned that these results are preliminary and “subject to detailed financial reconciliation and a final audit.”
Kieswetter outlined several factors that led to the record collection, including a strong rebound of economic activity last year as government lifted COVID-19 restrictions, tax administrative enhancements that improved compliance, and spending boosted by increased social assistance to the poor.
Strong economic recovery
“Revenue collections have been buoyant because of strong economic recovery boosted by elevated commodity prices for much of the reporting period. Better than anticipated corporate earnings supported CIT and PAYE collections, while stable interest rates and pent-up demand shored up VAT collections,” the Commissioner explained.
SARS’ compliance interventions enabled it to collect R209.7 billion, representing 13.4% of total revenue collections.
“The substantial improvement in total tax revenue collections resulted in a 25.0% tax-to-GDP ratio, exceeding the high percentage attained in 2007/08 of 23.8%, given the context of the rebasing of the GDP, signposting a quicker return to pre-COVID pandemic levels,” he added.
Incidentally, this year marks SARS’ 25th anniversary – and the collection represented a 25% year-on-year growth. Tax refunds were also the highest since SARS was established.
“The sectors that benefited most from the refunds compared to the prior year are mining, finance, agriculture [and] manufacturing. The tax refunds paid out in the year under review are the highest ever paid out by SARS in 25 years of its existence,” Kieswetter said.
“It represents an estimated 5.1% of GDP and allows for this to flow back into the hands of individuals and businesses to stimulate the economy.”
Better-than-expected tax revenue has already enabled the government to extend the COVID-19 R350 social relief of distress (SRD) grant for one more year until March 2023.