South Africa’s tax revenue up 10%


    23 October 2012

    South Africa grew its tax revenue by R68.5-billion in 2011/12 to total R742.6-billion, R3.9-billion more than forecast by Finance Minister Pravin Gordhan in his 2012/13 Budget, the SA Revenue Service (Sars) reports.

    Releasing its 2012 Tax Statistics report on Monday, Sars noted that the 10% increase in tax revenue in the 2011/12 financial year (from R674-billion in 2010/11) stood in marked contrast to 2009/10, when tax revenue contracted by four percent,following the 2008-09 global financial crisis.

    As he prepares to present his Medium-Term Budget Policy Statement on Thursday and amid continuing uncertain economic times for South Africa, Gordhan will welcome the almost R4-billion in extra tax.

    Sars’ report says that, in comparison with its international counterparts, South Africa has withstood the crisis relatively well, maintaining sustainable budget deficits aided by resilient tax collections.

    The Receiver attributed this to its modernisation programme, a responsive tax policy, and vigilant compliance-enhancing measures.

    Companies, personal contributions increase

    The growth in tax collections in 2011/12 was driven largely by significant increases in Company Income Tax (CIT) and Personal Income Tax (PIT).

    CIT, which makes up about a fifth of all fiscal contributions, was up 15% from R133-billion in 2010/11 to R152.6-billion last year. PIT, which makes up a third of all tax contributions, increased by 10%, from R227-billion to R250-billion.

    VAT, which makes up a further quarter of tax contributions, grew by four percent, from R184-billion to R191-billion. Customs duties grew 26%, from R27-billion to R34-billion.

    However, with the slowing in the disposal assets and decline in asset values, Capital Gains Tax (CGT) fell from R9.1-billion in 2010/11 to R6.8-billion in 2011/12.

    According to the report, between 2005/06 and 2011/12, tax relief totaling R60.5-billion was granted to individuals, mainly to those in lower income brackets, with almost a third of this (R19.1-billion) granted in 2006/07.

    Tax register for individuals surges

    The report also reveals that the tax register for individuals surged 74.7%, from 10.3-million in 2010/11 to 13.7-million in 2011/12, following a new Sars policy which requires employers to register all employees regardless of their income.

    Of the 4.5-million assessed taxpayers, 40.2% were registered in Gauteng, 56% were male, and 27.5% were aged between 25 and 44 years old.

    As at March 31 this year, there were just over two-million companies, 652 349 VAT vendors, 247 595 importers and 224 216 exporters registered with Sars.

    The number of companies on the tax register has grown from 1.8-million in 2009 to just over 2.03-million as of March 31 this year. Of these, a third (791 5730) of companies were liable to submit CIT and, as of March 31, 51.5% or 407 286 companies had been assessed for tax.

    Electronic filing, or e-filing, accounted for 64.6% of the value of tax payments in 2011/12, up from 30.8% in 2007/8. The remainder of tax payments were made by taxpayers at banks and at Sars branches.

    South Africa’s total taxes to gross domestic product (GDP) increased marginally, from 24.5% in 2010/11 to 24.6% in 2011/12, but this ratio was still below the peak of 27.6% reached before the 2008-09 global financial crisis.

    The ratio of CIT to GDP was most affected by the crisis, declining from 7.3% of GDP in 2008/09 to 5.1% of GDP in 2011/12.