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South African Tax Agency Reports On Tax Trends

by Lorys Charalambous, Tax-News.com, Cyprus

18 December 2017


The South African Revenue Service (SARS) has released the 2017 edition of its Tax Statistics report, looking at the agency's performance over the 2013 to 2016 tax years.

The release of the report comes amid criticism of the agency that it has failed to meet revenue collection targets. In November 2017, the Government announced that an inquiry would be launched into the agency's perceived failings.

SARS reported that revenue from personal income tax (PIT), as a percentage of total tax revenue, increased from 29.6 percent in 2007/08 to 37.2 percent in 2016/17.

The agency said: "This robust performance allowed Government to offer large scale tax relief to all South Africans. This is despite the fact that the minimum tax thresholds for taxpayers below the age of 65 has increased from ZAR40,000 (USD3,118) in the 2007 tax year, to ZAR73,650 in the 2016 tax year."

The agency highlighted that the report shows that a taxpayer earning taxable income of ZAR100,000 in 1995 would have paid tax at a rate of 33.8 percent. The tax burden has fallen considerably since, the agency pointed out, with someone earning the same income, after adjusting for inflation, paying an effective tax rate of 18.3 percent in 2016.

SARS said the key findings of this year's report are:

  • Tax revenue grew by 6.9 percent year-on-year, supported by personal income tax, which grew by 9.4 percent.
  • The tax-to-GDP ratio was 26 percent for 2015/16, slightly below the peak of 26.4 percent in 2007/08;
  • Net value-added tax collections were up 2.9 percent year-on-year, despite economic growth of less than one percent. VAT refunds grew by 8.7 percent.
  • Revenue collected from import taxes, import VAT, and customs duty declined by one percent and 1.5 percent, respectively.

Although in the recent past South Africa has been very successful in expanding its taxpayer base, going from just 1.7m registered taxpayers in 1994 to 16.8m in 2014, revenue growth has started to tail off in recent years. With revenues failing to keep up with spending, the inevitable result has been a widening budget deficit, which the Government has found difficult to contain. The blame has fallen on the tax agency.

TAGS: South Africa | tax | value added tax (VAT) | budget | corporation tax | tax thresholds | tax authority | individual income tax | VAT refunds | Africa

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