SARS collects over R1trn but concerns persist over VAT refunds

By Lameez Omarjee and Liesl Peyper – Fin24

Pretoria –  The South African Revenue Service (SARS) collected R1.144trn for the 2016/17 financial year, according to SARS commissioner Tom Moyane.

Tom Moyane. Picture: SARS website

Moyane was speaking at the preliminary revenue collection results announcement on Monday.

Last year SARS had collected over R1trn (R 1.0699trn) in revenue, a first for the tax authority. This surpassed Treasury’s target of R1.0697trn for the period. SARS attributed this to its operating model.

New Finance Minister Malusi Gigaba was also at the briefing. He explained that the projected revenues had been revised down from R1.175trn to R1.14 trn, due to the poorly performing economy, which grew at 0.3%.

Moyane echoed these views, saying that revenue realisation was impacted by declining consumption levels, constrained further by the interest hike cycle and declining business confidence.

The downward revision by R30bn was due to customs duties being down R6.5bn, because of the contraction in imports. VAT had been dragged down by Import VAT collections by R11.3bn. Personal income tax underperformed by R15.2bn, with growth declining to 9%, down from 12%.

The tax authority has come under fire for delaying a total of R19.6bn of VAT refunds to vendors as at the end of February 2017. This is according to former finance minister Pravin Gordhan, who answered a question in Parliament about the outstanding VAT refunds.

Gordhan explained that the total value of VAT refunds claimed between March 2016 and February 2017 was R129bn, of which R19.6bn was not refunded by February 28 2017. The total value of VAT refunds still being audited as at February 28 2017 was R17.3bn.

Subsequently, the tax ombudsman received Treasury’s nod to investigate systems at SARS. Judge Bernard Ngoepe told Fin24 that the process should be completed within the next two months. The tax ombud had contacted SARS and engaged with other stakeholders and tax practitioners.

Has the South African Revenue Service (SARS) held onto refunds to boost its figures? That is the question in the spotlight as the Tax Ombud probes why it is taking so long for SARS to get money back to squeezed taxpayers.

The decision to launch a probe came about given the level of complaints received regarding the refunds. Ngoepe explained that the issue is not one related to governance, but rather the mechanisms applied.

“My duty is to ensure fairness between taxpayers on one side and SARS on the other side. Which is why I have to be objective in my duties,” he said.

SARS in turn issued a statement saying that it would cooperate with the tax ombudsman’s investigation.

At a briefing in Parliament last week, acting chief officer Firdous Sallie answered questions about the tax authority’s revenue collection figures, the issue of outstanding VAT refunds and its tax collection systems.

She explained that submissions to SARS go through a rigid process. “On the one hand we have to ensure refunds are paid out timeously, but on the other hand we must make sure it stands up to the test of not being a fraudulent VAT claim,” she said.

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