South Africa's record tax revenue haul
21 October 2011
Members of Parliament this week congratulated the South African Revenue Service (Sars) for collecting a record R674.2-billion in tax revenue in 2010/11 - up by 13% over the previous financial year.
Briefing the National Assembly's standing committee on finance, Sars Commissioner Oupa Magashula said this year's tax haul - which also exceeded Sars' collection target by R2-billion - topped that of 2009, when Sars collected R625-billion.
He said six of the country's seven tax categories had increased over 2010, with the main contributors being personal income tax, up by R21.6-billion, and Value Added Tax (VAT), which was up by R35.6-billion. Only corporate income tax had shown a slight decrease.
Tax revenue has increased at an average of 11.8% year on year since the 1995 financial year.
Dramatic growth in electronic filing
During the 2010 tax season 2.7-million returns were assessed within 24 hours - up 18% from the 2009 tax season (2.3-million returns) assessed during the same period.
Magashula said 81% of taxpayers had filed their taxes on time in the last tax season and that 79% of refunds were paid out within 48 hours.
The number of registered users on e-Filing had increased 12-fold - from 500 000 at the end of 2006 to just over six-million users by the end of March this year. The dramatic growth in online filing resulted in just 4.2% of tax returns (186 000) being submitted on paper in the 2010 tax season - down from eight percent in the 2009 tax season.
The Sars call centre handled over five-million calls last year - including a record of over three-million calls during the 2010 tax season.
Cutting down on VAT fraud
Magashula said the modernisation of VAT had resulted in over 88% of VAT declarations being paid out within 48 hours. This has reduced VAT credits held by Sars, from R27.8-billion at the start of the financial year to R22-billion currently.
In the last tax season Sars collected R287.2-billion in VAT and paid out about R10-billion in VAT refunds a month, making it the largest tax administered by Sars.
Of all the tax types, VAT had the biggest scope for abuse and the Receiver had introduced a number of measures over the past few years to reduce fraud.
This included the introduction at the beginning of this year of an additional verification process after a flag was raised when an increase in VAT refunds was not supported by a similar increase in corporate income tax.
As part of a new VAT risk process VAT vendors selected for further verification of their refund claims are now given the option to either submit documents in support of their declaration or to revise their declaration when an error is suspected. Almost a quarter of vendors given this option had opted to revise their refund downwards, with the result that close to R4-billion had been saved by the fiscus.
Sars had also introduced a self-management tool for VAT vendors in which vendors are able to manage their own VAT accounts, he said, adding that further improvements are anticipated as the VAT modernisation continues.
Investigative taxpayer audits
A total of R191-million was collected through fines levied on more than 125 000 taxpayers that had submitted outstanding returns after being issued with administrative penalties.
The Receiver also recorded an 83% success rate when it came to investigative audits on taxpayers, which had resulted in about R3.9-billion netted.
Magashula said the cost of collecting tax had remained at between 1% and 1.2% for every R1 collected over the past six years, which he pointed out made Sars one of most cost-effective revenue administrations in the world.
In the area of customs, the Receiver had made 23 580 seizures - including counterfeit CDs, DVDs, drugs, clothing and cigarettes - with a street value of R994-million.
Sars was also re-engineering its customs inspection process which would help to combat customs fraud. This has resulted in inspectors no longer being allowed to select the cases they work on - these are now randomly assigned to inspectors.
World-class software platform
The Receiver had also invested in a 100% Sars-owned subsidiary company, Clidet 967, which would develop a world class customs software platform for South Africa, as well as for other tax administrations on the continent.
Magashula said Sars continued to play a leading role in a number of international multilateral tax and customs forums, including the Organisation for Economic Co-operation and Development (OECD) and the World Customs Organisation.
He thanked the 15 000 employees of Sars who he said had worked "tirelessly to serve with dedication, passion and integrity and an unwavering commitment to meeting the needs of the South Africa people".