Views Article – Sharenet Wealth

Africa, News

South Africa collects $85 billion in taxes in 2020/21 – revenue service

(Adds details, quotes from tax commissioner, background)

JOHANNESBURG, April 1 (Reuters) – South Africa collected 1.25 trillion rand ($85 billion) in tax revenue in the financial year ended March 2021, around 12% less than the government’s original target of 1.425 trillion rand, the revenue service said on Thursday.

The economy, in recession even before the coronavirus struck, shrank by 7% in 2020, while unemployment also soared, leading to a record budget deficit as the government was starved of revenue while forced to spend more to fight the virus.

The initial 2020/21 target of 1.425 trillion rand was set by the National Treasury before the coronavirus pandemic struck in March last year.

Treasury revised the estimate down to 1.112 trillion rand in October, but then upped it to 1.212 trillion in the February 2021 budget.

The South African Revenue Service (Sars) said improved economic activity, higher collections company tax, especially mining firms, and greater tax compliance, had led to better collection than the February target.

Sars Commissioner Edward Kieswatter said the agency would focus on stricter compliance, especially by high net-worth individuals, to close the gap.

“Sars is aware of increasing number of south Africans who have financial assets offshore … they have more than 400 billion rand in offshore accounts. We’ve identified around 10% of that, but we believe there’s still a lot to be explained,” Kieswatter told a news conference.

Kieswatter said the bans on the sale of alcohol and tobacco during the strictest period of the coronavirus lockdown cost the country around 14 billion rand in lost excise taxes. ($1 = 14.6551 rand) (Reporting by Mfuneko Toyana Editing by Tanisha Heiberg and Alison Williams)

© 2019 Thomson Reuters. All rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. "Reuters" and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.