Sars' revenue collection down 7.8% in 2021

25th January 2022 By: Schalk Burger - Creamer Media Senior Deputy Editor

The National Treasury and the South African Revenue Service (Sars) Tax Statistics 2021 edition shows that during the 2020/21 financial year, total tax revenue collections declined by 7.8% to R1.25-trillion from the R1.36-trillion collected in the preceding year.

"Revenue collections in the 2020/21 fiscal year were severely impacted on by the Covid-19 pandemic lockdown restrictions, and an already struggling economy that contracted by 7% in 2020."

The fourteenth yearly edition of tax statistics provides an overview of tax revenue collections and tax return information for the 2017 to 2021 tax years, as well as the 2016/17 to 2020/21 fiscal years, and showed that total tax revenue collected by Sars increased from R1.14-trillion in 2016/17 to R1.25-trillion in 2020/21, growing at a compound annual growth rate (CAGR) of 2.2% over this period.

This is significantly lower than the CAGR of 9% attained in the previous five-period from 2011/12 to 2016/17.

Additionally, the tax-to-gross domestic product (GDP) ratio moderated from 23.8% in 2019/20 to 22.5% in 2020/21. This was mainly owing to yearly reductions in the revenue collected from personal income tax, value-added tax (VAT) and domestic specific excise duties.

Personal income tax at 39.1%, corporate income tax at 16.4% and VAT at 26.5% together remain the largest sources of tax revenue and comprise 81.9% of total tax revenue collections, the Treasury and Sars say.

Further, corporate income tax reveals that, out of the 812 306 companies assessed as at September 2021 for the 2019 tax year, 24% had positive taxable income, while 48.3% had taxable income equal to zero and the remaining 27.7% reported an assessed loss.

Additionally, personal income tax, geographic, demographic and other analysis of taxpayers assessed at the end of September 2021 for the 2020 tax year showed that 2.091-million, or 40.1%, of assessed taxpayers were registered in Gauteng.

Further, 687 261 of assessed taxpayers lived in the Johannesburg Metropolitan area and were taxed on an average taxable income of R481 209.

Meanwhile, 1.365-million, or 26.2%, of assessed taxpayers were aged between 35 and 44 years, and 2.79-million, or 53.6%, of assessed taxpayers were male and 2.42-million, or 46.4%, were female.

"Assessed taxpayers had aggregate taxable income of R1.8-trillion and a tax liability of R407.2-billion. Their average tax rate was 22.4% compared with 22.3% in the previous tax year. Income from salaries, wages and other remuneration as well as pension, overtime and annuities accounted for 91.6% of total taxable income," the tax statistics report shows.

Additionally, in 2020/21, 79.3% of active VAT vendors were companies or close corporations, which contributed 92.9% to domestic VAT payments and accounted for 91.2% of VAT refunds. Although individuals, namely sole proprietors, comprised 15.3% of VAT vendors, they contributed 2.4% of domestic VAT payments and received 1.2% of VAT refunds.

Further, import VAT and customs duties accounted for 13.3% and 3.8% respectively of the year’s total tax revenue collected, resulting in a 17.1% aggregate which was slightly below the 17.5% average over the preceding five fiscal years.

The share of these taxes to GDP decreased to 3.8% from the preceding five-year average of 4.1%, with import VAT recording 3% and customs duties 0.8%.

Additionally, in 2020/21, capital gains tax (CGT) of R16.4-billion was raised, of which R8.4-billion was attributable to individuals and trusts and R7.9-billion to companies. An aggregate of R173.1-billion has been raised since the introduction of CGT in October 2001, with R80.9-billion from individuals and trusts and R92.1-billion from companies.

Meanwhile, the largest contributing Harmonised System sections to customs duties in 2020/21 were vehicles, aircraft and vessels at 20.1%, textiles and clothing at 19%, machinery and electronics at 13.8%, as well as food, beverages and tobacco at 13.4%.

The sections of vehicles, aircraft and vessels, at 56.7%, as well as machinery and electronics, at 38.6%, were the largest contributors to the ad valorem duty total, with 30.1% of the former’s total comprising luxury vehicles from Germany, while 63.2% of the latter’s total made up by electronic devices mainly from China.

Imports under the food, beverages and tobacco section made up 97.5% of the specific excise duty total, largely driven by cigarettes, at 37.1%, and sourced mainly from Switzerland, and whiskies, at 35.4%, and imported mostly from the UK.

"The overall effective customs duty rate in 2020/21 was 2.8% compared with the 3.2% in the previous year. Key commodities with the highest effective duty rates were footwear and accessories at 24.5%, hides, skins and leather at 19.5%, textiles and clothing at 14.5%, food, beverages and tobacco at 9.8%, as well as vehicles, aircraft and vessels at 6.9%."