SARS Surpasses Revenue Targets with a 6.6% Increase, Boosted by Strong Tax Compliance and New Retirement System

(The Post News)- With a net tax revenue collection of R1.855 trillion for the fiscal year 2024–2025, the South African Revenue Service (SARS) has exceeded projections. Despite difficult economic conditions, this amount not only surpassed the National Treasury’s updated estimate of R1.846 trillion by R8.8 billion, but it also represented a 6.6% rise over the previous year.

SARS Commissioner Edward Kieswetter presented the preliminary revenue statistics on April 1st, stating that the result was especially remarkable considering the nation’s 4.9% economic growth rate. The results show a noteworthy tax-to-GDP ratio of 24.8%, which suggests sound financial standing and a strong ability to raise money even in a comparatively weak economy.

The introduction of South Africa’s new two-pot retirement withdrawal mechanism was a major factor in this performance. It was predicted that this provision, which permits members of retirement funds to access a portion of their savings, would bring in R12.9 billion for the year, significantly more than the R5 billion that was anticipated. Personal income tax (PIT) collections increased by R81.8 billion (12.6%), according to SARS, in part due to above-inflation pay growth in the community and finance sectors.

Despite initial predictions of stagnation, SARS also observed growth in the corporate income tax (CIT), which increased by R6.5 billion (2.1%). Even while the mining industry continued to decrease, the banking sector, which reported higher earnings, was primarily responsible for this development. Additionally, value-added tax (VAT) increased steadily and now accounts for 24.7% of total receipts.

In addition to these successes, SARS stepped up its efforts to stop systemic fraud and abuse. During the year, the tax office issued a record-breaking R448 billion in refunds. Kieswetter, however, raised concerns about the possibility of return fraud, pointing out that SARS had stopped R147 billion in illegal reimbursements from being issued.

The measures used by SARS to prevent tax evasion were noteworthy as well. The agency is aggressively pursuing non-compliance, concentrating on those involved in illegal financial transactions and large-scale tax evasion. SARS estimates that around R500 billion in taxes are still unpaid, including substantial sums due by wealthy people. In order to improve its enforcement skills, the agency has implemented cutting-edge technology including machine learning and artificial intelligence.

In order to strengthen its debt collection efforts and fight the black market, the South African government has given SARS an additional R7.5 billion over the medium term. Kieswetter cautioned that continued attention is required in spite of these achievements. “I am pleased that the R447.7 billion returned to taxpayers is good for the economy,” he said, “but I remain deeply concerned about the ever-present threat of refund fraud and abuse of the system.”