South Africa Sees Billions In Extra Tax Revenues

April 4, 2011 Taxation in South Africa

Rabodirect Rebels vs SharksPreliminary tax collection data is indicating that South Africa is making strides on its way to a sound financial recovery, through a combination of greater efficiency from South African Revenue Service and overall favorable economic conditions.

Speaking at a press conference held in Pretoria on April 2nd, Minister of Finance of South Africa Pravin Gordhan revealed that there has been significant growth in national tax revenue figures, and the government is projecting increasing GDP growth over the next two years. Due to a government policy combining raises to collection levels and decreases in public spending, the country’s budget deficit is now 5 percent of GDP, 0.3 percent lower than in the previous year.

According to figures released by South African Revenue Service SARS, during the fiscal year ending March 31st tax authorities collected a total of ZAR 674.2 billion in tax revenues, ZAR 2.02 billion higher than was forecasted in the national budget plan, revealed at the beginning of the financial year. Revenues from Value Added Tax (VAT) saw the most significant increases, compared to other taxes raised throughout the previous year, with extra collections of ZAR 2.8 billion. Corporate income taxes experienced the next highest positive change, with a reported rise of ZAR 0.9 billion. Collections of personal income taxes and excise duties were revealed to have experienced revenue drops, with decrease of ZAR 1 billion and ZAR 1.4 billion respectively.

The Minister said that the increasing revenues were partially due to the SARS’s recent tax compliance enforcement initiatives. Throughout the year, the tax authority’s efforts led to 10 percent more individual tax payers filing their tax returns than in the previous year. Upgrades to the country’s tax filing infrastructure have also paid off, with 96 percent of all tax returns being electronically submitted. The new system is allowing tax authorities to run data matching procedures on tax returns, in an effort to discover non-disclosure or false information.

Photo by ryk_neethling