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South African 2013/14 Revenue Exceeds Expectations

by Lorys Charalambous, Tax-News.com, Cyprus

03 April 2014


On April 1, the South African Revenue Service reported the preliminary revenue outcome for the 2013/14 fiscal year, showing that it had collected ZAR899.7bn (USD84.9bn), up from ZARR814.1bn a year earlier.

SARS therefore collected ZAR0.7bn above the revised estimate in the 2014 Budget, and exceeded the previous year's revenue collections by ZAR85.7bn. While South Africa's nominal gross domestic product growth (GDP) for 2013 had remained at 8.3 percent, tax revenue grew by 10.5 percent.

The increased tax collection in 2013/14 has increased the country's tax-to-GDP ratio from 25.9 percent, anticipated in the 2014 Budget, to 26 percent. However, this outcome was still below the 27.6 percent of GDP seen in 2007/08, because the tax-to-GDP ratio declined to 24.4 percent in 2009/10.

The three main revenue contributors in 2013/14 were personal income tax (PIT), corporate income tax (CIT) and value-added tax (VAT).

Total PIT collections were ZAR310.5bn, or ZAR33.8bn (12.2 percent) higher than the ZAR276.7bn received in the previous fiscal year; CIT collections were ZAR179.9bn, or ZAR19bn (11.8 percent) higher than the ZAR160.9bn outcome in 2012/13; and VAT revenue reached ZAR237.7bn, an increase of ZAR22.7bn (10.6 percent) over the ZAR215bn collected in the previous fiscal year.

Among the drivers of the rise in revenues in 2013/14 were said to be the mining and manufacturing sectors that grew at double-digit rates in the fourth quarter of 2013 after lackluster performances earlier in the year; the above-inflation wage settlements that sustained PIT revenue; and the strong imports that advanced customs revenue.

In addition, the depreciation of the Rand – losing 17.5 percent of its value against the US dollar in 2013 – improved trade-related taxes and the CIT from companies with offshore earnings. As a result, the previously slow recovery of CIT receipts following the 2009 recession accelerated this year because of higher export earnings.

Improved tax compliance was also sustained by SARS, with improved collections from medium-sized companies in particular as well as from provisional tax payments by individual taxpayers earning income from sources other than salaries.

TAGS: South Africa | compliance | tax | value added tax (VAT) | tax compliance | mining | gross domestic product (GDP) | corporation tax | tax authority | manufacturing | import duty | revenue statistics | currency | individual income tax | Africa

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