Pretoria, Wednesday 1 April 2020 – The South African Revenue Service (SARS) today announced its preliminary revenue collection results in the context of global and local economic weaknesses, compounded by the worldwide COVID-19 pandemic.

The drivers of the revenue collected are the activities that SARS has taken to rebuild the organisation, the compliance culture among taxpayers and traders, as well as the performance of the economy and tax policy matters.

SARS has collected an amount of R1 355.9 billion in the financial year ending 31 March 2020.

The gross collected amount of R1 647.8 billion was offset by refunds of R291.9 billion, resulting in net collections of R1 355.9 billion, which represents growth of R68.2 billion (5.3%) against the 2018/19 financial year.

It should be noted that these are preliminary results, which will be subject to detailed financial reconciliation and a final audit.

Measured against the 2019 Budget Estimate of R1 422.2 billion, this results in a deficit of R66.3 billion (-4.7%), and against the 2020 Budget Estimate of R1 359.0 billion, this results in a deficit of R3.1 billion (-0.2%).

It is well understood that revenue outcomes are in the main underpinned by the state of the economy, fiscal policy choices, public confidence and administrative efficiencies. The value of economic activities consists of two components, namely a growth rate and an inflation rate. Over the past years, tax revenue collections have continued to perform below expectations driven by weak economic activity, which has led to a moderation in collection of some major tax categories. Corporate income tax collections continue to underperform, driven by reduced production in the mining and quarrying and manufacturing sector.
Pay-as-you-earn (PAYE) collections continue to be challenged by sluggish employment and wage growth. Given the current economic environment, the 2019/20 revenue is R66.3 billion lower than estimated in the 2019 Budget. Global economic growth in the 2019 calendar year has been characterised by subdued growth with growth slowing to 2.9% in 2019 from 3.6% in 2018. Furthermore, world trade remained sluggish. The WTO recently downgraded merchandise trade growth expectation for 2019 to 1.2%, down from the previous 2.6%. The downgrade is attributed to the slowing economic growth, increased tariffs, Brexit-related uncertainty, and the shifting monetary policy stance in developed economies.

As an open economy, South Africa’s economic fortunes are partly synchronised with fluctuations in global output and demand, trade, monetary shocks, capital flows, geopolitical tensions etc. Slowing global demand and trade tensions between major economies are also affecting trade, manufacturing, confidence and investment levels domestically. Together with the weak domestic economic environment, these serve to exacerbate an already elevated risk to total revenue collections.

The South African economy entered into a technical recession as the seasonally adjusted annual GDP contracted by 1.4% q/q in Q4-2019, down from a contraction of 0.8% in Q3-2019. The economy grew by 0.2% in 2019 – low outcome compared to most forecasts. All three sectors recorded negative growth rates (primary – 0.4%; secondary – 2.9% and tertiary sector – 1.0%). The primary sector contracted with agriculture declining by 7.6% from 4.5% q/q in Q4-2019 while the mining industry reported a growth of 1.8% from -17.4% q/q in Q3-2019. The secondary sector recorded the largest negative contribution to GDP. Manufacturing declined by 1.8% from a contraction of 4.4% weighed by declines in motor vehicles and wood products. The electricity and construction industries declined by 4.0% (prior -4.9%) and 5.9% (prior -6.9%) q/q largely due to a decrease in electricity distributed and low levels of buildings completed respectively. Overall, the tertiary sector reported large contractions with the trade sector recording the highest decline due to negative growth in the wholesale and motor vehicle trade industries.

The main sources of revenue that contributed to the R1 355.9 billion collected were Personal Income Tax (PIT), which contributed R528.9 billion (39.0%), Value-Added Tax (VAT) contributing R346.6 billion (25.6%), Company Income Tax (CIT), which contributed R214.7 billion (15.8%) and Customs duties which contributed R55.4 billion (4.1%). The relative contribution of the main taxes to total tax revenue has shifted with an ever-increasing dependence on personal income tax revenue mainly due to tax policy changes. PIT remains the largest contributor to total tax revenue and its contribution has increased to 39.0% in 2019/20 from 38.4% the prior year, mainly due to partial fiscal drag relief.

The contribution of VAT and import duties continue to decrease mainly due to a weak economic growth environment with lower consumer and investment spending in the economy. CIT’s contribution to total tax has been declining over the past years, decreasing to 15.8% in 2019/20 due to low business profits and weak economic growth.

• PIT collections were slightly lower than Budget 2020 Estimate by R0.4 billion (0.1%), mainly as a result of PIT provisional tax payments which were higher than expected by R2.7 billion (9.3%) offset by lower-than-expected PAYE of R2.1 billion (0.4%) and PIT Assessment payments of R1.0 billion (6.1%).
• CIT collections are below Budget 2020 Estimate by R4.6 billion (2.1%), mainly as a result of CIT Provisional tax payments and Assessment payments which were lower than expected by R3.1 billion (1.4%) and R0.8 billion (5.5%) respectively. This performance is in spite of positive growth experienced in the Mining and quarrying sector mainly driven by the Iron ore as well as the platinum group metals (PGMs) sub-sectors. CIT performance was also boosted by positive performance in Gross Operating Surplus (GOS), which recorded a consecutive Q/Q growth of 4.3% and 4.0% in Q3-2019 and Q4-2019 respectively. The Mining and quarrying sector was the key driver in both quarters, after recording a growth of 11.1% and 7.4% in Q3-2019 and Q4-2019 respectively

However, the overall performance in CIT Provisional tax payments was negatively impacted by the contraction in the major contributing sectors such as Finance (R1.1 billion, 1.7%) and Manufacturing (R1.5 billion, 4.9) following unreliable electricity supply as well as weak business and consumer confidence. Furthermore, the falling economic activity due to the COVID-19 pandemic has caused metal prices to be on a downward spiral, resulting in lower demand for commodities thus hurting the manufacturing activity.

 
CIT refunds were also higher-than-expected by R2.3 billion (13.3%) against the Budget 2020 Estimate as a result of efforts to clear the IT credit book, which continued particularly for Large Business in the Manufacturing and Finance sectors.

• Dividend Tax collections are marginally lower against Budget 2020 Estimate by R0.9 billion (2.9%). Unreliable electricity supply, stagnant commodity prices as well as the recent economic developments of the COVID-19 pandemic have impacted companies’ profitability negatively.
  Furthermore, a consecutive quarterly GDP contraction of 1.4% in Q4-2019 as well as a revised contraction of 0.8% in Q3-2019 have also put more strain on DT/STC collections. The Manufacturing industry was one of the largest negative contributors to the contraction, decreasing by 3.9% and contributing 0.5 percentage point.

• Domestic VAT is R0.06 billion (0.0%) above Budget 2020 Estimate, despite high unemployment, sluggish household income growth and high indebtedness, which continue to subdue consumer spending.

• VAT refunds are R5.4 billion (2.3%) lower than Budget 2020 Estimate, as a result of more stringent measures in an effort to curb leakage due to fraudulent claims. Gross fixed capital formation contracted in all 4 quarters of 2018 resulting in a 1.4% contraction for that year compared to a 1.0% growth in 2017. It also contracted by 4.1% in 2019-Q1 and by 10.0% in 2019-Q4 with an overall 2019 contraction of 0.9%.

• Import VAT fell short of Budget 2020 Estimate by R3.1 billion (1.7%), mainly due to narrow growth rates from the largest commodity drivers of the tax, underpinned by the overall merchandise import level growing by just 3.2% in 2019/20 compared to the prior year (PY).

• Customs Duties fell short of Budget 2020 Estimate by R0.1 billion (1.6%), largely drive by narrow to negative growth rates in key contributing chapters, underpinned by the overall merchandise import level growing by just 3.2% in 2019/20 compared to PY.
  The negative performance of the taxes above was partially offset by the Excise collections which were R1.1 billion (0.7%) higher than the Budget 2020 Estimate.

REVENUE TABLES:

 

Pretoria, Thursday 26 March 2020 – The South African Revenue Service (SARS) is fully aligned and supportive to the overall Containment Strategy of Government, in response the COVID-19 pandemic.  SARS is also sensitive to the economic distress and anxiety that is likely to result during this unchartered and unprecedented phenomenon.

As part of the containment strategy, the stringent 21-day lockdown announced by President Cyril Ramaphosa is a severe but necessary move to curb the spread of the virus, and flatten the curve of new infections.

SARS Commissioner Edward Kieswetter said: “We express our social solidarity with all infected and affected individuals, including taxpayers, businesses traders, who have been, and continue to be negatively impacted by the COVID-19 pandemic.”

“We wish to reassure them that SARS remains committed to providing the necessary services necessary for government to continue receiving the necessary tax revenues that fund the provision of public goods and services, whilst ensuring that the much needed refunds flow to taxpayers already experiencing hardship.  Even during this trying time, as part of our strategic objective, we will continue to provide certainty and make it easy for taxpayers and traders to interact with SARS,” the Commissioner said. “I am sure that honest taxpayers would also like the assurance that during this time, our tax and customs laws remain in force to prevent fraudulent and criminal abuse of the tax system” he added.

“SARS remains critical for our country’s current and future economic and social development. In terms of the regulations governing the lockdown, SARS has been declared an essential service, which is vital to ensure” that the short-term and long-term economic effects of the COVID pandemic are mitigated as far as possible,” Commissioner Kieswetter further stated.

Taking into account the devastating economic impact of this pandemic, the President also announced a number of measures to help tax compliant companies in distress and their affected employees, especially Small, Medium and Micro Enterprises (SMMEs) which SARS will have to administer over the short term.

The SARS Commissioner concluded by saying that: “However, as a responsible and caring employer, SARS also wants to ensure the wellbeing and protection of its employees and their families, while giving effect to the measures announced by the President. Therefore, in order to protect our employees and their families, SARS will minimize face-to-face contact and exposure by putting in place a range of service options that taxpayers and traders can use to engage with SARS during the lockdown.”

Taxpayers and traders are required to use online services such as eFiling, the SARS MobiApp and e@syFile. Some of the services available on eFiling include debt queries, payments to SARS, enquiries regarding outstanding returns, tax compliance status (applications for TCS), notice of registration (IT150), filing returns, and username retrieval and password reset.

In addition, taxpayers may also call the SARS Contact Centre (0800 00 7277). As an absolute exception, taxpayers who have exhausted our online services and Contact Centre may book an appointment at a SARS branch. Until further notice, SARS will only serve taxpayers at our offices by appointment. Taxpayers who have a confirmed appointment will be issued with a confirmation notice, which together with their personal identity, they will be able to use in terms of travel restriction provisions in order to obtain this essential service.  

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Exceptional tax measures

The Minister of Finance announced the tax adjustments in the light of the National State of Disaster and the negative impacts on the economy from the spreading of the virus,

Small Business relief

For Small Businesses in need of financial support during this difficult time, refer to the Debt Relief Finance Scheme offered by the Department of Small Business Development,

Trade Statistics

SARS released trade statistics for February 2020 recording a trade surplus of R14.15 billion attributable to exports of R109.60 billion and imports of R95.45 billion,

High call volumes

The SARS Contact Centre is experiencing high call volumes today. Taxpayers are advised to use the call back option and an agent will call the taxpayer back.

eFiling downtime

Due to ongoing maintenance, eFiling may not be available on Wednesday, 16 October 2019, from 19:00 to 20:00. Our apologies for any inconvenience.

Online Bookings

Taxpayers and Tax Practitioners may book an appointment in exceptional circumstances during the lockdown period,

Auto registration for tax

Register for eFiling and you will be automatically registered for personal income tax and receive a tax reference number. Note that you must have a valid South African ID,

VAT Notice of Registration

VAT vendors can now obtain a VAT notice of registration on eFiling, by following a few easy steps. The VAT vendor needs to be a registered eFiler,

Pay all tax due by 31 March

It’s crunch time. To avoid penalties and interest, submit outstanding tax returns now and pay all tax due by 31 March,

No need to go to a Branch

Available on eFiling: Enquire on debt outstanding and make a payment, enquire on returns outstanding, Tax Compliance Status, Request Statement of Account,

R2.4 billion tax refunds

SARS has paid out refunds to taxpayers amounting to R2.4 billion over the four days of lockdown, from Friday 27 March,

Beware of scams

The latest SARS phishing scam pretends to be a letter of demand from SARS. Do not click on any links that will ask personal details, see the Scam Alert webpage for examples,

Job seekers do not need tax reference numbers

SARS does not require a person to have a tax number when employed for the first time. Employers need to register employees for income tax online,

Employers

SARS wishes to thank those compliant employers who have carried out all their tax obligations as agents for SARS, in terms of our country’s tax legislation,

Single registration

Allows taxpayers to register, maintain and view associated tax and customs registrations in a consolidated tax profile,

Pretoria, 12 March 2020 – The South African Revenue Service (SARS) wishes to thank those compliant employers who have carried out all their tax obligations as agents for SARS, in terms of our country’s tax legislation.

Employers are agents for SARS, as they deduct income tax that is due by an employee and pay the deducted amounts over to SARS. The amounts deducted or withheld by an employer must be paid to SARS on a monthly basis by completing the EMP201.

Employers are also required to submit an annual reconciliation declaration (EMP501) for the full year – from 1 March to 28/29 February.

However, many employers, just over 40 percent, deduct tax from their employees’ income through Pay-As-You-Earn (PAYE), but do not in turn pay SARS.

These non-compliant employers must note that it is the duty of SARS to communicate with employees about any potential tax shortfalls, which may be payable by them on assessment, because of the non-payment of PAYE by an employer. This can be avoided by paying the outstanding PAYE in full (including interest and penalties where applicable) to SARS, within 10 calendar days from receipt of a letter from SARS.

For employees to be able to receive a streamlined and seamless service during filing season, it is critically important that employers fulfil all their registration, filing and payment obligations.

If there is any non-compliance with any of these legal obligations, SARS will commence with criminal investigations, and lay criminal charges where necessary.

SARS’ role will be to provide clarity and certainty to all taxpayers about their tax obligations, and to make it easy to comply with these obligations.

Employers must remember that their compliance enables their employees’ compliance.

Furthermore, their on-time payment of the PAYE that they deduct from their employees constitutes a huge contribution to the revenue that SARS collects every year.

This revenue in turn allows government to provide the much-needed basic services and other public goods to the poorest of the poor.

All this is made possible by complying with their monthly and annual tax obligations.

Pretoria, Sunday 1 March 2020 – South African Revenue Service (SARS) Commissioner Edward Kieswetter has expressed his appreciation of the judgement of the Supreme Court of Appeal (SCA) to dismiss with costs an application for leave to appeal by businessman Mr Mark Roy Lifman.

The SCA ruled last week that Mr Lifman had no reasonable prospect of success in his attempt to stop SARS from seizing his assets in settlement of a tax debt amounting to R352-million, excluding interest.

In June 2019 Western Cape High Court Judge Elizabeth Baartman also dismissed Mr Lifman’s application for an order to halt SARS’ execution orders to seize Mr Lifman’s assets and auctioning them off to recover the tax debt.

She found that his objections to the assessments raised by SARS had been filed “belatedly and opportunistically”. Mr Lifman then turned to the SCA.

According to Commissioner Kieswetter, this latest protracted legal battle is further evidence that SARS is working hard to regain the capacity it lost over the past few years in dealing with taxpayers who are avoiding their tax obligations through an abuse of the legal system.

The latest SCA ruling comes immediately after a similar victory for SARS when the SCA ruled against Mr Gary van der Merwe in a 10-year battle over his tax debt.

“I want to appeal to all taxpayers and traders to discharge their legal obligations of paying their fair share of taxes. SARS is committed to helping you to comply with your obligations and entrenching a culture of voluntary tax and customs compliance.

“It is through such voluntary compliance and the associated revenue that SARS collects that our country will be able to provide basic services to the poorest of the poor, whether in the form of social grants, basic education, housing, medical care and other public goods.

“However, I want to warn those who seek to remain non-compliant through whatever means, that SARS will not rest until we recover what is due to the fiscus,” Mr Kieswetter said.

He added that there is a worrying trend developing among employers who deduct tax through from their employees through Pay-As-You-Earn (PAYE) but then fail to pay over the money to SARS.

“This development of PAYE non-compliance is a cause for concern and SARS is determined to take every action to stamp it out. The same applies to all other forms of non-compliance from other taxpayers and traders, whether they are in public institutions, private companies or individuals,” Mr Kieswetter stated.

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