03/04/2017 14:49 SAST | Updated 03/04/2017 15:50 SAST

Slow Economic Growth To Blame For SARS Collecting Less Tax Than It Initially Thought It Would Get

Not only has SARS failed to pay back VAT returns to vendors, but it has also not received its projected tax income.


On Monday the South African Revenue Service (SARS) held its preliminary revenue collection results announcement, at which it was revealed that not only has SARS failed to pay back VAT returns to vendors, but it has also not received its projected tax income.

SARS commissioner Tom Moyane announced that the projected revenues had been revised down from R1.175 trillion to R1.14 trillion, and that it collected R1.144 trillion for the 2016/17 financial year.

Last year, SARS collected R 1.0699 trillion in revenue, a first for the tax authority. New Finance Minister Malusi Gigaba, who was also at the briefing , attributed this to due to the poorly performing economy which grew at 0.3 percent. Moyane echoed these views, saying that revenue realisation was impacted by declining consumption levels, constrained further by the interest hike cycle and declining business confidence.

The downward revision by R30 billion was due to customs duties being down by R6.5 billion, as a result of the contraction in imports. VAT had also been pulled down by Import VAT collections by R11.3 billion. Additionally, personal income tax underperformed by R15.2 billion.

SARS has also come under fire for not having paid back VAT refunds to vendors , which was due at the end of February this year. When former Finance Minister Pravin Gordhan was asked about this in parliament, he said that the amount of VAT refunds owed to vendors totals to R19.6 billion. Gordhan explained that the total value of VAT refunds claimed between March 2016 and February 2017 was R129 billion, of which R19.6 billion, was not refunded by February 28 2017. The total value of VAT refunds still being audited as at February 28 2017 was R17.3 billion. Following this, the tax ombudsman made an application to investigate SARS, to which treasury agreed. The tax ombud has since contacted SARS and engaged with other stakeholders and tax practitioners. SARS responded to widespread criticism by issuing a statement saying that it would cooperate with the tax ombudsman's investigation.