Tuesday, 05 May 2020
Pretoria: The South African Revenue Service says the country’s tax and revenue performance has taken a knock as a result of an ailing economy compounded by the COVID-19 pandemic.
“Whilst it is early days, our initial view is that revenue performance will be lower than the February Budget announcement by between 15%-20%. This means that revenue under-recovery could move up to R285 billion,” said SARS Commissioner Edward Kieswetter.
The Commissioner was speaking at a briefing where he outlined the impact of COVID-19 on revenue collection services on Tuesday.
From the preliminary assessment of revenue performance of the first month, we can report the under-recovery of around R9 billion for April represents a year-on-year decline of 8.8%,” said Kieswetter.
“The main drivers for this under-recovery includes PAYE down on the prior year by 5.2%,” he said.
The 65 219 employers who made payments in April 2019 did not make payments in April 2020, the tax value of which is R3.8 billion.
In addition, 87 137 employers who made payments in April 2019, made lower payments in April 2020, the tax value of which is R6.1 billion.
Domestic VAT also saw a downward spiral on the prior year by 4.3%.
A number of vendors who filed and paid decreased by 13% from 160 136 in April 2019 to 139 313 in April 2020.
“139 313 vendors that paid this year, only 104 996 (75%) are repeat payers (also paid in the PY). Collections from this 75% of vendors that paid in both years contracted by R200m (0.9%). This signifies a strain in the core tax base,” said Kieswetter.
Year-on-year monthly payments from those who filed decreased by 20% with a tax value of R1.1b.
Import tax drops
Import tax is also down on the prior year by 19.7%. Specific Excise Duties also plummeted down on the prior year by 54.7% – the tax value of which is R1.3 billion.
“We have already received requests for payment deferrals from three taxpayers in respect of Alcohol, Cigarettes and Fuel. We are currently investigating non-compliance in instances of alcohol and cigarettes,” said the Commissioner.
Illicit sale of cigarettes and alcohol
Kieswetter highlighted that the illicit sale of cigarettes and alcohol has continued despite the ban of these goods during the lockdown.
“We have anecdotal evidence that illicit sale of cigarettes and alcohol has continued during the lockdown period – whilst the revenue impact is relatively low as a percentage of total revenue. We raise the criminality thereof as our main concern,” he said.
With ongoing illicit trade activities during April, SARS effected a number of detentions and seizures.
This includes 43 detentions of various goods from cigarettes to masks.
A total of 17 seizures to the value of R2.6 million – mainly cigarettes, alcohol and counterfeit clothing and footwear was also carried out.
Corporate Taxes down on prior year by 55.4%
While April is not a significant month for corporate taxes, Kieswetter said early indications point to a downward spiral in all areas with the exception of electricity, gas and water.
“We expect that the number of companies who will apply for business rescue will grow over the next year,” he said.
VAT Refunds 12.5% lower than estimated
VAT refund payments for April were lower as the number of credit returns contracted compared to the prior year for the month of April – refund value of R15.5 billion compared to R17.7 billion in April 2019.
SARS urges taxpayers to use e-services amid COVID-19
The South African Revenue Service (SARS) has urged taxpayers to remain compliant and make use of its online services as the country battles an ailing economy compounded by the COVID-19 pandemic.
“If there was ever a time where delivering on our mandate matters, it is now. During this time, it remains extremely important for all taxpayers to remain compliant,” said SARS Commissioner Edward Kieswetter.
This, Kieswetter said means taxpayers must register when they are legally required to; submit tax and customs declarations, returns, and relevant submissions when it is required and make the necessary payments when they become due, unless they have entered into a permissible payment arrangement with SARS.
In light of the pandemic, government needs tax revenue to provide much needed relief to businesses and individuals, and especially to keep an army of community health workers, and other medical and frontline workers employed.
Many businesses and individuals are desperately in need of refunds that are payable – which requires SARS to perform the necessary verification and assurance work and to manage the risks related to refunds.
“Our customs officials have had to ensure that the essential and legitimate PPE, medical equipment and supplies as well as other permitted cargo can be lawfully moved through our ports of entry.
“We also had to prepare our core administration systems to administer all the tax relief measures announced by government,” said Kieswetter.
SARS boosts digital services amid COVID-19
In an effort to balance SARS’ essential mandate and government’s national effort to curb COVID-19, the revenue collection entity has reconfigured its work to convert more taxpayers to its digital services and modify its operations.
“I am pleased to share that our technology and data management teams have worked tirelessly and added 30 additional functionalities to our digital offering including: automated registration for PIT – almost 6 000 registrations have already taken place.
“Notice of registration for VAT now available on e-filing, allowing VAT vendors to view, print or save their Notice of Registration – almost 5 000 have already been facilitated,” said Kieswetter.
To adhere to social distancing, taxpayers are urged to use the enhanced e-filing system. Non-filers can now also submit supporting documents via the web – to reduce the need to come to visit offices. To date, over 1 200 submissions have been made.
SARS has also suspended the need for VAT interviews as a pre-registration requirement to post registration – almost 3 000 taxpayers have taken this up.
Make an appointment online
In support of public health and social distancing measures, SARS introduced an online appointment system for those taxpayers and tax practitioners who remain insistent or unable to convert to digital.
“We are currently redesigning our website to enhance navigation and functionality and align it to our refreshed branding which we will launch shortly. We will announce additional enhancements as they are completed,” said Kieswetter.