Global Courant 2023-04-20 17:27:05
The South African Revenue Service (SARS) says tax shedding has taken a toll on tax collection, particularly value added tax.
During a standing finance committee op April 19the tax office said severe and frequent power outages had cost SARS up to R60 billion in tax collections.
The group’s Chief Revenue Officer, Johnstone Makhubu, said that shedding the tax in the year 2022 would cost the group around R60 million; however, there is an immediate effect and a lag effect regarding the blackouts and tax collections.
He said the lag effect is most likely to be felt in corporate taxation in the long run.
Sales tax collections first feel the effect of tax shedding as sales fall, Makhubu said.
SARS is likely to feel the loss of R60 billion over the course of this year as the loadout continues and more financial returns are filed.
The load shedding does not seem to be slowing down, especially in the coming winter months when demand is expected to skyrocket. Eskom said the country is currently on an indefinite rotation schedule between Phase 5 and Phase 6.
In South Africa, sellers are subject to a standard VAT rate of 15% on goods and services supplied, with only a select few goods and services exempt or taxed at a zero rate.
SARS has made a concerted effort to ensure compliance through a new binding general arrangement (BGR) with regard to the Turnover Tax Act. According to the latest ruling, more documentation is needed for creditors to substantiate input tax deductions on repossessions or the transfer of property.
Sellers are now further required to disclose any changes to their VAT registration status to a creditor.
Despite new initiatives to improve VAT collection, SARS can do little when sales plummet, as businesses are unable to conduct economic activity during blackouts.
SARS has been on a steady upward trend, with tax collections for 2022/23 worth R1.69 trillion in net collection, significantly exceeding expectations.
SARS said this was a record total gross while the more than R380 billion in repayments was also the largest ever paid since its inception.
The National Treasury said the increase in revenues is due to higher collections of corporate and income taxes, as well as customs duties.
Speaking in his 2023 budget speech, Finance Minister Enoch Godongwana said, “Our country is reaping the benefits of a more efficient and effective tax administration that builds trust to increase voluntary compliance and boost revenue collection.”
Read: SARS comes after luxury vehicles in South Africa
