BY: Saneliso Mlambo
The South African Revenue Service (SARS) Commissioner has requested an additional R3 billion in funding from the Treasury to enhance tax compliance rates, aiming to increase the current rate of 64% to 67%.
This initiative is part of a broader strategy to reduce the tax gap and bolster national revenue collection.
In the 2022/2023 financial year, SARS reported gross revenue collections of R2.068 trillion, falling short of the revised estimate by R3.21 billion but marking a year-on-year growth of 9.7%. Net revenue collections amounted to R1.687 trillion, reflecting a 7.9% increase from the previous year. Despite these positive figures, the tax compliance rate of 64% indicates significant room for improvement.
Achieving the proposed 3% increase in compliance would substantially narrow the tax gap, ensuring that more taxpayers fulfill their obligations, thereby enhancing public service funding and supporting economic development.
Comparatively, Canada’s tax gap was estimated at 8.3% of corresponding revenues for the 2014 tax year. This highlights the challenges faced by tax authorities globally in achieving full tax compliance.
The Treasury’s decision on the funding request will be pivotal in determining SARS’s capacity to implement enhanced compliance measures and achieve the targeted improvements in tax collection efficiency.