22 October 2013
Despite concerns over lagging company income tax, South Africa’s tax revenue has recovered since the 2008-09 global financial crisis, growing at 6.8% between 2008/9 and 2012/13, according to the South African Revenue Service’s (Sars’) head of revenue analysis, Randall Carolissen.
Speaking during the release of Sars’ annual tax statistics in Parliament in Cape Town on Monday, Carolissen said all the country’s tax types – with the exception of company income tax – had rebounded strongly since the 2009 recession.
Though the country’s tax income performance still fell short of the pre-crisis period between 2004/5 and 2007/8, when tax revenue grew by 17.3%, the decline during the recession – a 4.2% contraction in 2009/10 over 2008-09 – was not as dramatic as that of over developing economies, Carolissen said.
For the 2012/13 fiscal year, tax revenue collected amounted to R813.8-billion, up R71.2-billion or 9.6% over the previous tax year.
However, while personal income tax and VAT contributions had recovered relatively well since 2008, company income tax (CIT) collections had not yet recovered to pre-crisis levels, due to the contraction in the contribution by the mining sector.
While only 55% of CIT assessments have so far been carried out, projections show that R160.9-billion will be collected for 2012/13, below the R167.2-billion which was collected in 2008/9.
CIT contributions increased steadily between 1994/5 and 2008/9, making up 26.7% of tax revenue in 2008/9, but have since fallen to an expected 19.8% of tax contributions in 2012/13.
Carolissen said CIT contributions from both the manufacturing and mining sectors had declined after the recession because of increased labour costs, higher administrative inflation and production hours lost to labour unrest.
At the same time, he noted that Sars had in recent years instituted a number of innovations that had helped to limit compliance lapse, including the introduction of the 80% rule, which requires provisional taxpayers with taxable income of more than R1-million to settle at least 80% of their tax liability by the time they make their second provisional payment.
“This amendment to the Act ensured that CIT collections are accounted for in the correct reporting period,” Carolissen said, adding that the policy change had helped improve CIT collections in 2009/10, so cushioning the effect of the recession.
The latest tax statistics also reveal that:
- The number of registered taxpayers grew by 32.5% over 2011/12 to 15.4-million individuals in the 2012/13 tax year, following the requirement in 2010 that all employed people have to be on Sars’ tax register regardless of whether they are liable for income tax or not.
- Over 5.8-million individual taxpayers were liable to submit tax returns in 2012/13.
- South Africa’s tax-to-GDP ratio increased marginally from 25% in 2011/12 to 25.3% in 2012/13. This is comparable to a number of countries, include Australia, Japan, Turkey, the US, Switzerland and Korea.
- A total of R45.3-billion in tax relief was granted to individuals between 2008/9 and 2012/13.
- The value of tax payments made at branches fell from 21.8% in 2008/9 to 1.8% in 2012/13, with 64.8% of payments in the last financial year done through Sars’ online e-filing system.