I APOLOGISE UP FRONT BUT WE HAVE QUITE A LOT TO SHARE WITH YOU AS WELL AS THE PUBLIC.

TOPICS TO COVER:

A. SARS response to Current Covid-19 Challenges

1. Working Arrangements

2. Revenue Management

B. Personal Income Tax Filing Season 2020/21

C. A brief 12 month reflection since my appointment on 1 May 2019 

Good afternoon and welcome to our media briefing.

So much has changed during the past 2.5 months to bring to a culmination a year that was already characterized with so many challenges ahead of COVID-19 and the investment downgrade. We are already 5 weeks into the new financial year, and the harsh reality is beginning to emerge as Government is trying to balance the health and mortality outcomes on the one hand, with the social and economic challenges on the other. 

I would like to start with our current challenges presented by Covid-19, in particular how it has impacted on our work arrangements as well as our initial sense of the impact on tax revenue collections.

1. WORKING ARRANGEMENTS UNDER COVID-19

The world, South Africa and specifically we at SARS are facing unprecedented challenges and literally find ourselves in unchartered waters. At the outset, I would like to say that being in unchartered waters does not mean that you proceed without a plan. It simply means that you proceed with utmost caution, you use the best evidence available, and you remain open to new information and most importantly demonstrate genuine humility, an eagerness to learn, and the agility to adapt your approach as the situation evolves. 

This is how we are proceeding at SARS, and I would like to express my unqualified appreciation to my colleagues who have generously stepped up to help develop an appropriate response that SARS adopted in dealing with the current challenges.

Under the Disaster Management Regulations, the SARS Commissioner is authorized to determine which SARS services are considered essential. Many have asked why SARS is essential during this time. Well, if there was ever a time where delivering on our mandate matters, it is now.

More than ever before:

1. 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 – the current economic environment is already constrained as it is.

2. 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 – sadly we are still dealing with abuse of the refund system.

3. 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.

4. We also had to prepare our core administration systems to administer all the tax relief measures announced by government.

During this time, it remains extremely important for all taxpayers to remain compliant.

This means:

• To register when they are legally required to;
• To submit tax and customs declarations, returns, and relevant submissions when it is required
• To make the necessary payments when they becomes due, unless they have entered into a permissible payment arrangement with SARS.

COVID-19 has meant that we review the way we work. I’d like to share with South Africans that we’ve had to balance the essential mandate as I’ve just set out, with the health risk to our employees as well as taxpayers, traders and practitioners.

So what have we done to reconfigure our work?

• We stepped up our efforts to convert more taxpayers to our digital offerings
• We modified our operational rhythm towards a new normal 

I will deal with each of these in turn:

2. First, as part of our VISION 2024 we have committed to build a “smart modern SARS with unquestionable integrity, trusted and admired”. We have decided to use the COVID crisis to step up our work towards this vision. 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:

1. Automated registration for PIT – almost 6 000 registrations have already taken place

2. Notice of Registration for VAT now available on e-filing, allowing VAT vendors to view, print or save their Notice of Registration – almost 5000 have already been facilitated

3. Taxpayers may use the enhanced e-filing system to:

1. Check their compliance status

2. Review  their registration details

3. Complete proof of registration

4. Obtain a statement of account – individuals and businesses

4. Non-filers can now submit supporting documents via the web – to reduce the need to come to our offices – over 1200 submissions to date

5. We have suspended the need for VAT interviews as a pre-registration requirement to post registration – almost 3000 taxpayers have taken this up

6. Developed a streamlined banking details verification process by using enhanced data matching and artificial intelligence based verification – 14 800 already completed

7. Enhanced the process for on-line tax directives where individual taxpayers or their practitioners may apply via e-filing,

8. We’ve integrated our email system with our automated case management system to allow taxpayers as an exception to send queries via email – this has allowed many of our staff working from home to resolve taxpayer queries – almost 5000 has already been resolved   

9. Introduced an on-line appointment system for those taxpayers and tax practitioners who remain insistent or unable to convert to our digital offerings – we did this to avoid unnecessary queues at our branches in support of public health and social distancing measures.

10. Enhanced our websites with enabling information and FAQ’s on our website to assist taxpayers, traders and practitioners – 1,34 million hits, of which 80k were Covid-19 related

11. We are currently redesigning our website to enhance navigation and functionality and align it to our refreshed branding which we will launch shortly.

12. We will announce additional enhancements as they are completed.

3. Second, in response the lockdown regulations we modified our working arrangements as follows:

1. We introduced four organizational arrangements immediately:

1. Stepped up regular communications to our employees, using multiple media and channels, including personal letters and “fireside” chats from myself, as the situation evolved in order to raise awareness of Covid-19, inform them of work arrangements, and generally to remain in touch and provide them with clarity and ongoing assurance, 

2. Proactively engaged the leadership of organised labour to create the opportunity for them to obtain clarity directly from us and empower them to understand the new workplace arrangements, and give us regular feedback where teething problems or employee concerns manifested.

3. Established an Operations Bridge to coordinate daily activities and ensure the appropriate balance between taxpayer demand and our capacity to respond, to ensure a consistent operational rhythm across the organization, and support managers in the front line.

4. Introduced daily operational check-ins to remain agile and responsive to a rapidly emerging “new normal”, and support with staff orientation, training, and guidance.

5. Established a number of focused work-streams where design, enabling and support teams could reconfigure and recalibrate the operational platform, as well as adjusting policies and standard operating procedures in support of this “new normal”.   

6. Constituted a Covid-19 Task Team to study the regulations, survey best practices, assess our workplace readiness, and advise the Commissioner.

2. In addition, we:

• Allowed most of our employees who are not on leave, to work from home to honor the letter and spirit of the lockdown,
• Introduced a rotation schedule to initially reduce staffing levels at our contact centers to a third of normal levels, and slowly increased the staffing levels in line with our ability to implement social distancing.
• Coaching and assisting taxpayers, traders and practitioners via our contact centers to convert to digital offerings, as we encouraged them to “go online”.
• Limited visits to our branches by implementing an appointment system, and only staffed up to respond to confirmed appointments.

3. Employees at home were provided, where appropriate, with:

• E-mail access and data to connect,
• Access to SARS core system via a virtual private network access.

4. On a demand basis, where employees were required to physically come to a SARS office, to conduct essential activities, we:

• Instituted strict public health measures as directed by the Ministry of Health, and more recently the occupational health measures by the Department of Labour.
• Reconfiguring our work and public spaces to apply the necessary social distancing measures. 

5. Throughout this period our staffing levels ranged from 15% to 30% during the initial lockdown period, and we are currently increasing these employment levels gradually to ensure we cope with the demand from taxpayers and deliver on our mandate.

6. We remain agile and responsive to a situation that is rapidly evolving. 

4. The government announced a number of Tax Relief Measures, and we had to prepare our core administrative systems to ensure a seamless implementation across our organization.

5. During this period SARS also received a number of requests from other government departments for assistance, to leverage our data matching capabilities, especially in support of improving the integrity of the various relief disbursements

In terms of trade facilitation during lockdown, a number of measures were put in place to achieve the twin goals of facilitating permissible trade, whilst adhering to the safety protocols to protect our frontline customs officers. These include:

1. Automated customs declarations allow traders to submit their declarations and permit automated processing to facilitate legitimate trade whilst minimizing manual interaction between Customs officials and Traders.

2. We’ve implemented measures to protect our customs officers including:

• Sanitization of work areas
• Personal Protective Equipment for frontline staff
• Use of non-intrusive equipment for physical inspections

3. Extensive engagement with stakeholders to clarify lockdown regulations and applicable     relief measures.

4. Stepped up our interaction with intergovernmental agencies:

• To facilitate the movement of cargo and avoid congestion at our ports of entry
• Ensure efficient movement of goods to and from our neighboring states within the regulatory provisions

We have observed ongoing illicit trade activities and have effected a number of detentions and seizures during April:

· 43 Detentions (everything from cigarettes to masks).

· 17 Seizures to the value of R2.6 million mainly cigarettes, alcohol and counterfeit

                 clothing and footwear.

2. REVENUE MANAGEMENT & PERFORMANCE 

Tax & Customs Revenue performance was significantly affected during this period. This is an evolving picture and will be continually refined, but will chiefly be a function of:

            1. The general state of the South African economy heading into the Covid-19 challenge, but aggravated by the investment downgrades by two ratings agencies

            2. The specific impact of Covid-19 Tax Relief Measures

            3. Decisions made by government during the various Lockdown Levels that will have a direct impact on economic capacity as well as economic activities

            4. The general impact on the Compliance environment

1. General State of the South African Economy, Impact of Downgrade & Covid-19

1. Last week National Treasury pointed to a severe global economic crisis not seen since the Great Depression:

• Predicting a contraction of around -3% for the current year alone
• Advanced economies bear the brunt of this contraction at -6.1%, whilst
• Developing economies projecting a contraction of -1%
• Sub-Saharan economies projecting a contraction of -1.6%

2. For South Africa, three scenarios are modeled which predicts GDP outcomes ranging from between -5.4% to -16% for the current financial year.

3. Final outcomes will depend on the extent of the pandemic globally, and locally a function of lockdown decisions exercised as government tries to contain the spread of the virus and manage the health and mortality outcomes.

4. We concur that there are so many unknowns and indeterminate variables that are confronting all predictive models that are continually being updated.

5. We are certainly facing the worst economic performance in recent times, which are aggravated by the structural faults in our economy, which includes:

• The stubborn legacy of Spatial & Social inequality that has not been addressed since the start of our democracy
• Still unacceptably poor educational outcomes, which places constrains on future skills
• Unacceptably low levels of labour intensive growth, aggravating already high levels of unemployment
• Poorly performing state owned monopolies with huge negative impact on the state balance sheet and administered prices – driving unacceptable debt service costs and price inflation
• A highly concentrated private sector with limited competition and highly restrictive entry barriers for new and especially smaller players

2. IMPACT ON REVENUE PERFORMANCE

1. 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.

2. 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%
• Main drivers for this under-recovery includes:

1. PAYE down on prior year by 5.2%

• 65 219 employers who made payments in April 2019, but no payments in April 2020 – tax value of R3.8b
• 87 137 employers who made payments in April 2019, made lower payments in April 2020 – tax value R6.1b

2. Domestic VAT down on prior year by 4.3%

• 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.
• Year-on-year monthly payments from those who filed decreased by 20% with a tax value of R1.1b

3. Import Tax overall down on prior year by 19.7%

• Import VAT down 25% on prior year – tax value R1.6b
• Customs Duties down 11.8% on prior year – tax value R100m 

4. Specific Excise Duties down on prior year by 54.7% – tax value R1.3b (R1.7b lower on alcohol and cigarettes, offset by R0.4b upward correction on Fuel Levy)

• We have already received requests for payment deferrals from 3 taxpayers in respect of Alcohol, Cigarettes and Fuel
• We are currently investigating non-compliance in instances of alcohol and cigarettes
• 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  

5. Corporate Taxes down on prior year by 55.4%

• April is not a significant month for corporate taxes, but 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

6. VAT Refunds 12.5% lower than estimated

VAT refund payments for April is lower as the number of credit returns contracted compared to the prior year for the month of April – refund value of R15.5b compared to R17.7b in April 2019 

3. TAX RELIEF MEASURES:

1. The cost of Covid-19 Tax Relief Measures alone is estimated at R70 billion arising from tax deferrals without penalties and interests, Employee Tax Incentive extensions as well as the temporary suspension of the Skills Development Levy.

2. This number:

• Includes R5 billion for case-by-case applications for deferrals, but we predict this number to be significantly higher, and
• Excludes a projection of a decline in general compliance simply due to business struggling with cash flow, and unable to repay the deferred payments during the current fiscal year, or simply defaulting and/or failing completely

3. We therefore project that the total impact of the Tax Relief Measures is likely to be much higher than the R70b initial assessment

4. IMPACT ON ECONOMIC CAPACITY DUE TO COVID-19 AND LOCKDOWN

A major concern that we have from a revenue perspective is not only a downward trend of economic activities, but a loss of economic capacity due to businesses closing and job losses. The full impact of this will manifest over the next few months, and also depend on how government manages the phasing in of economic activities.

Many businesses will simply not be able to operate profitably at reduced capacity and will fail completely. Those who have started businesses from scratch, will know how hard it is to start a business – it often takes 100 business ventures to start one successfully! The loss of economic capacity in our economy will have long-term tax revenue implications.

Our initial assessment is informed by the following data points:

1. According to STATSSA report on Liquidations & Insolvencies

1. Liquidations increased by 12.3%, for February 2020 vs February 2019, with an increase in voluntary applications

2. Insolvencies increased by 13.9% for January  2020 vs January 2019

2. According to directives finalised, we can report an increase of 1 622 employees retrenched in April 2020 compared to April 2019 – an increase of almost 9% – Total retrenchment in April 2020 amounted to just over 20 000.

3. STATSSA also conducted a perception survey, targeting VAT registered businesses, with a reference period of 30 March – 13 April 2020, and reported:

• 42% businesses feel they cannot operate through the Covid-19 pandemic
• 54% businesses felt they could survive between 1-3 months
• 46.4% of businesses have temporarily closed their doors
• Only half of the respondents felt their workforce would not be affected
• 36.8% businesses expect that they will definitely decrease their workforce
• 20% of businesses have laid off staff in the short term
• 28% businesses have decreased working hours
• 85.4% businesses reported their turnover below their normal level for the period
• 2/3 businesses feel that the impact will be worse than 2008/9 recession
• Of the 707 businesses surveyed:

(i) Manufacturing – 180

(ii) Trade – 71

(iii) Logistics & Communications – 52

(iv) Real Estate & Business Services – 44

(v) Construction – 39

5. NOW I WISH TO FOCUS ON THE UPCOMING TAX FILING SEASON

More than ever before, we need taxpayers to remain compliant! We have designed the Filing Season 2020 for Personal Taxes with a number of key changes:

PHASE 1: 15 April 2020 – 31 May 2020 – EMPLOYER FILING

6. Compliance by Employers in respect of payroll taxes (PAYE) is very important

• A renewed focus to ensure that all Employers are fully compliant in terms of their filing and payment obligations – We expect all employers to fully comply because this ensures a much lower burden of compliance for their employees in respect of their filing obligations
• Employers, are legally appointed agents on behalf of SARS – We remind employers that it is a criminal offense to collect income tax from their employees, and not pay this over to SARS

7. Compliance by providers of Third Party Information

• We also appeal to Employers, along with other providers of third party information to fulfill this requirement by the end of May 2020.
• Third Party Information allows us to use data modeling and artificial intelligence to perform the final assessment of all standard taxpayers and provide the majority of individual taxpayers with a seamless filing experience.
• Third Party Providers include:

1. Employers

2. Banks

3. Financial Service Companies who administer retirement fund and pension schemes

4. Medical Savings and insurance schemes

• In addition, SARS will interface with the National Population Register, the Companies Register and the Deeds Office

PHASE 2: 1 June 2020 – 31 August 2020 – TAX FILE UPDATES

8. During this period taxpayers are requested to engage with SARS to ensure that their tax files are up to date, in terms of general hygiene checks, banking details, address changes, etc. SARS on-line facilities are available to do most of this. These checks will now be done mainly online before Filing Season.

9. All outstanding third party information will also be followed up during this period to ensure the highest level of data integrity. Third party data providers, including employers, who remain willfully non-compliant will be charged criminally during this period.

10. During this phase a significant number of taxpayers will receive auto-assessments and given an opportunity to confirm their acceptance of the assessment outcome according to SARS.

11. During PHASE 2, individual taxpayers who are required to file but have not been auto-assessed may file early via on-line facilities if their employers & other third party data providers are fully complaint (which includes no PAYE debt without a proper and secure deferment arrangement).

12. Individuals who are not required to file will be informed.

13. Individuals who are required to file during Phase 3 will be informed.

PHASE 3: 1 September – 31 January 2021 – EMPLOYEE FILING

1. Individuals who are required to file will be reminded.

2. Individuals who are non-provisional taxpayers or have not accepted the outcome of an auto-assessment are required to file as from 1 September through to 16 November 2020 and encouraged to file using our on-line channels to minimise visits to our offices.

3. Individuals who are non-provisional taxpayers, who make use of our Branch facility has until the 22 October 2020 to file.

4. Provisional Taxpayers who have not accepted the outcome of an auto-assessment are required to file when they are ready but not later than 31 January 2021.

6. REFLECTIONS AFTER MY FIRST YEAR BACK AT SARS

As I wrap up I would like to reflect briefly on the past 12 months since I started on 1 MAY 2019.

By now it is widely known that SARS has suffered a serious breakdown in governance and integrity and suffered a measurable decline in employee morale, significant damage to its reputation, and an unfortunate loss in public confidence. This was also reflected in a steady decline in revenue performance, levels of compliance and taxpayer morality.

The journey of rebuilding SARS commenced with a review of the integrity and performance of the senior SARS leadership.

Today I can report progress as follows:

14. We have largely addressed issues of leadership integrity

15. We have initiated a programme to re-imagine and rebuild SARS consisting of:

1. An exciting VISION 2024

2. A SARS Strategic Intent based on Voluntary Compliance

3. Today we presented to the parliamentary committees

• a 5-year Strategic Plan
• an Annual Performance Plan     

16. In support of our Strategic Intent we have 9 Strategic Objectives

1. Provide Clarity & Certainty for taxpayers and traders of their Tax obligations

2. Make it Easy for Taxpayers & Traders to Comply & fulfill their obligations

3. Detect non-compliant Taxpayers & Traders, making non-compliance hard & costly  

4. Develop a high performing, diverse, agile, engage and evolved workforce

5. Expand the use of data to improve integrity, derive insight & improve outcomes

6. Modernize our systems to provide digital & streamlined services  

7. Resource stewardship for efficiency, quality outcomes & performance excellence

8. Work with & through Stakeholders to improve the tax eco-system

9. Build public trust and confidence in the tax administration system

17.  We have organized our work to give effect to the 9 Strategic Objectives

1. 3 Cluster Arrangement:

• Taxpayer Engagement
• Design & Enabling
• Enterprise Service & Support

2. A Regional Structure:

• 9 Geographic Regions
• 3 Taxpayer Segments

3. A Revised Leadership Organization and Reporting Arrangement

18. As part of rebuilding the soft infrastructure we have embarked on

• Restoring the Higher Purpose Orientation
• Rebuilding a new Leadership System
• A credible Employee Engagement Programme 

19. To enhance Revenue Performance we have introduced

• The position of Chief Revenue Officer
• An explicit focus on revenue from our Compliance Programme
• A focused Revenue Recovery Programme
• A Tax Gap Study under Judge Dennis Davis 

20. Rebuilding SARS will require time and consistent efforts.

• The current challenges presented by Covid-19, the investment downgrades, and the most significant economic contraction in recent times, have on the one hand made our work just so much harder, BUT
• At the same time, we are blessed with a solid foundation, many committed men and women, and a crisis which we are determined not to waste.
• We remain committed and inspired to pursue the important work we are privileged to do.

THANK YOU!

EDWARD CHR KIESWETTER

SARS COMMISSIONER

5 May 2020

Pretoria, Wednesday 1 April 2020 – The South African Revenue Service (SARS) today announced its preliminary revenue collection results in the context of global and local economic weaknesses, compounded by the worldwide COVID-19 pandemic.

The drivers of the revenue collected are the activities that SARS has taken to rebuild the organisation, the compliance culture among taxpayers and traders, as well as the performance of the economy and tax policy matters.

SARS has collected an amount of R1 355.9 billion in the financial year ending 31 March 2020.

The gross collected amount of R1 647.8 billion was offset by refunds of R291.9 billion, resulting in net collections of R1 355.9 billion, which represents growth of R68.2 billion (5.3%) against the 2018/19 financial year.

It should be noted that these are preliminary results, which will be subject to detailed financial reconciliation and a final audit.

Measured against the 2019 Budget Estimate of R1 422.2 billion, this results in a deficit of R66.3 billion (-4.7%), and against the 2020 Budget Estimate of R1 359.0 billion, this results in a deficit of R3.1 billion (-0.2%).

It is well understood that revenue outcomes are in the main underpinned by the state of the economy, fiscal policy choices, public confidence and administrative efficiencies. The value of economic activities consists of two components, namely a growth rate and an inflation rate. Over the past years, tax revenue collections have continued to perform below expectations driven by weak economic activity, which has led to a moderation in collection of some major tax categories. Corporate income tax collections continue to underperform, driven by reduced production in the mining and quarrying and manufacturing sector.
Pay-as-you-earn (PAYE) collections continue to be challenged by sluggish employment and wage growth. Given the current economic environment, the 2019/20 revenue is R66.3 billion lower than estimated in the 2019 Budget. Global economic growth in the 2019 calendar year has been characterised by subdued growth with growth slowing to 2.9% in 2019 from 3.6% in 2018. Furthermore, world trade remained sluggish. The WTO recently downgraded merchandise trade growth expectation for 2019 to 1.2%, down from the previous 2.6%. The downgrade is attributed to the slowing economic growth, increased tariffs, Brexit-related uncertainty, and the shifting monetary policy stance in developed economies.

As an open economy, South Africa’s economic fortunes are partly synchronised with fluctuations in global output and demand, trade, monetary shocks, capital flows, geopolitical tensions etc. Slowing global demand and trade tensions between major economies are also affecting trade, manufacturing, confidence and investment levels domestically. Together with the weak domestic economic environment, these serve to exacerbate an already elevated risk to total revenue collections.

The South African economy entered into a technical recession as the seasonally adjusted annual GDP contracted by 1.4% q/q in Q4-2019, down from a contraction of 0.8% in Q3-2019. The economy grew by 0.2% in 2019 – low outcome compared to most forecasts. All three sectors recorded negative growth rates (primary – 0.4%; secondary – 2.9% and tertiary sector – 1.0%). The primary sector contracted with agriculture declining by 7.6% from 4.5% q/q in Q4-2019 while the mining industry reported a growth of 1.8% from -17.4% q/q in Q3-2019. The secondary sector recorded the largest negative contribution to GDP. Manufacturing declined by 1.8% from a contraction of 4.4% weighed by declines in motor vehicles and wood products. The electricity and construction industries declined by 4.0% (prior -4.9%) and 5.9% (prior -6.9%) q/q largely due to a decrease in electricity distributed and low levels of buildings completed respectively. Overall, the tertiary sector reported large contractions with the trade sector recording the highest decline due to negative growth in the wholesale and motor vehicle trade industries.

The main sources of revenue that contributed to the R1 355.9 billion collected were Personal Income Tax (PIT), which contributed R528.9 billion (39.0%), Value-Added Tax (VAT) contributing R346.6 billion (25.6%), Company Income Tax (CIT), which contributed R214.7 billion (15.8%) and Customs duties which contributed R55.4 billion (4.1%). The relative contribution of the main taxes to total tax revenue has shifted with an ever-increasing dependence on personal income tax revenue mainly due to tax policy changes. PIT remains the largest contributor to total tax revenue and its contribution has increased to 39.0% in 2019/20 from 38.4% the prior year, mainly due to partial fiscal drag relief.

The contribution of VAT and import duties continue to decrease mainly due to a weak economic growth environment with lower consumer and investment spending in the economy. CIT’s contribution to total tax has been declining over the past years, decreasing to 15.8% in 2019/20 due to low business profits and weak economic growth.

• PIT collections were slightly lower than Budget 2020 Estimate by R0.4 billion (0.1%), mainly as a result of PIT provisional tax payments which were higher than expected by R2.7 billion (9.3%) offset by lower-than-expected PAYE of R2.1 billion (0.4%) and PIT Assessment payments of R1.0 billion (6.1%).
• CIT collections are below Budget 2020 Estimate by R4.6 billion (2.1%), mainly as a result of CIT Provisional tax payments and Assessment payments which were lower than expected by R3.1 billion (1.4%) and R0.8 billion (5.5%) respectively. This performance is in spite of positive growth experienced in the Mining and quarrying sector mainly driven by the Iron ore as well as the platinum group metals (PGMs) sub-sectors. CIT performance was also boosted by positive performance in Gross Operating Surplus (GOS), which recorded a consecutive Q/Q growth of 4.3% and 4.0% in Q3-2019 and Q4-2019 respectively. The Mining and quarrying sector was the key driver in both quarters, after recording a growth of 11.1% and 7.4% in Q3-2019 and Q4-2019 respectively

However, the overall performance in CIT Provisional tax payments was negatively impacted by the contraction in the major contributing sectors such as Finance (R1.1 billion, 1.7%) and Manufacturing (R1.5 billion, 4.9) following unreliable electricity supply as well as weak business and consumer confidence. Furthermore, the falling economic activity due to the COVID-19 pandemic has caused metal prices to be on a downward spiral, resulting in lower demand for commodities thus hurting the manufacturing activity.

 
CIT refunds were also higher-than-expected by R2.3 billion (13.3%) against the Budget 2020 Estimate as a result of efforts to clear the IT credit book, which continued particularly for Large Business in the Manufacturing and Finance sectors.

• Dividend Tax collections are marginally lower against Budget 2020 Estimate by R0.9 billion (2.9%). Unreliable electricity supply, stagnant commodity prices as well as the recent economic developments of the COVID-19 pandemic have impacted companies’ profitability negatively.
  Furthermore, a consecutive quarterly GDP contraction of 1.4% in Q4-2019 as well as a revised contraction of 0.8% in Q3-2019 have also put more strain on DT/STC collections. The Manufacturing industry was one of the largest negative contributors to the contraction, decreasing by 3.9% and contributing 0.5 percentage point.

• Domestic VAT is R0.06 billion (0.0%) above Budget 2020 Estimate, despite high unemployment, sluggish household income growth and high indebtedness, which continue to subdue consumer spending.

• VAT refunds are R5.4 billion (2.3%) lower than Budget 2020 Estimate, as a result of more stringent measures in an effort to curb leakage due to fraudulent claims. Gross fixed capital formation contracted in all 4 quarters of 2018 resulting in a 1.4% contraction for that year compared to a 1.0% growth in 2017. It also contracted by 4.1% in 2019-Q1 and by 10.0% in 2019-Q4 with an overall 2019 contraction of 0.9%.

• Import VAT fell short of Budget 2020 Estimate by R3.1 billion (1.7%), mainly due to narrow growth rates from the largest commodity drivers of the tax, underpinned by the overall merchandise import level growing by just 3.2% in 2019/20 compared to the prior year (PY).

• Customs Duties fell short of Budget 2020 Estimate by R0.1 billion (1.6%), largely drive by narrow to negative growth rates in key contributing chapters, underpinned by the overall merchandise import level growing by just 3.2% in 2019/20 compared to PY.
  The negative performance of the taxes above was partially offset by the Excise collections which were R1.1 billion (0.7%) higher than the Budget 2020 Estimate.

REVENUE TABLES:

 

SARS releases trade statistics for February 2020

Pretoria, 31 March 2020 – The South African Revenue Service (SARS) today releases trade statistics for February 2020 recording a trade surplus of R14.15 billion. These statistics include trade data with Botswana, Eswatini, Lesotho and Namibia (BELN). The year-to-date (01 January to 29 February 2020) trade surplus of R11.43 billion is an improvement from the R9.40 billion deficit for the comparable period in 2019. Exports increased by 11.9% year-on-year whilst imports for the same period showed an increase of 0.8%.

Click here for the full Media Release.

Or visit the Trade Statistics webpage.

Pretoria, Thursday 26 March 2020 – On 23 March 2020, the North Gauteng High Court handed down judgment in favour of the Commissioner in the matter between the Commissioner of SARS v The Public Protector and three others under case number 84074/19, which confirms that taxpayer information is confidential.

The Public Protector who, in the course of conducting an investigation, is empowered to subpoena any person for information in terms of section 11(3) of the Public Protector Act, 1994 had subpoenaed the Commissioner to provide taxpayer information in relation to such an investigation.

In terms of the Public Protector Act, 1994, a person is compelled to comply with a subpoena issued by the Public Protector unless there is “just cause” not to comply. The Commissioner therefore sought a declaratory order from the Court to clarify whether the Commissioner had “just cause” to decline to provide the Public Protector with taxpayer information because the Tax Administration Act, 2011 (TAA) does not allow disclosure.

The TAA prohibits SARS from releasing taxpayer information unless the disclosure falls within an exception to the general rule that safeguards taxpayer information expressly provided for in the TAA. The TAA, however, does not authorise SARS to release taxpayer information to the Public Protector, as an exception. In fact, releasing such information would be a breach of the confidentiality provisions, which is a criminal offence in terms of the TAA.

The Court ruled that:

“1.     It is hereby declared that a South African Revenue Service Official is permitted and is required under the provisions of “just cause” contained in section 11(3) of the Public Protector Act … read with section 61(1) of the Tax Administration Act … to withhold taxpayer information as defined in section 67(1)(a) of the Tax Administration Act…

2.     … the Public Protector’s subpoena powers do not extend to the taxpayer information”

Commissioner Kieswetter welcomes the judgement as it confirms that the Public Protector’s powers derived from the Public Protector Act do not claim superiority over the confidential status of taxpayer information prescribed in the TAA. He also points out that whilst this case may attract attention because it involves a prominent person, the underlying principle of confidentiality applies to every taxpayer equally and the entire tax base stands to benefit from this authoritative pronouncement.

Although the judgment relates to the Public Protector’s subpoena powers, most importantly, it confirms a number of fundamental principles of the confidentiality of taxpayer information says Commissioner Kieswetter.

First: Taxpayer information is sacrosanct. Since his appointment at SARS, Commissioner Kieswetter has continuously reiterated that SARS’ guarantee of confidentiality is what the taxpayer gets in return for the compulsion to provide open and full information to SARS. Without the statutory guarantee of confidentiality, the expectation that the taxpayer will be candid and accurate with SARS diminishes. It is the very foundation of the tax system in South Africa and generally tax systems worldwide, without which any tax administration cannot properly function

Secondly, every SARS official is legally required to treat taxpayer information with the utmost confidentiality and not to disclose it. Releasing such information would be a breach of the confidentiality provisions, which is a criminal offence in terms of the TAA. Every SARS official takes an oath or makes a solemn declaration to comply with the statutory confidentiality provisions. SARS officials adhere to their oath stringently and must continue to do so obsessively if we expect taxpayers to trust SARS. Commissioner Kieswetter has committed SARS to continuously strengthening its information security culture, systems, processes and procedures – even more so as SARS journeys towards becoming a digitalised revenue agency.    

Commissioner Kieswetter noted that the personal costs order against the Public Protector is a stark reminder to all SARS officials that each one of them represents the Government and has a profound duty to act with considerable care. SARS’ use of administrative power must always be fair, reasoned and, when necessary, firm and resolute.

Exceptional tax measures

The Minister of Finance announced the tax adjustments in the light of the National State of Disaster and the negative impacts on the economy from the spreading of the virus,

Small Business relief

For Small Businesses in need of financial support during this difficult time, refer to the Debt Relief Finance Scheme offered by the Department of Small Business Development,

Trade Statistics

SARS released trade statistics for February 2020 recording a trade surplus of R14.15 billion attributable to exports of R109.60 billion and imports of R95.45 billion,

High call volumes

The SARS Contact Centre is experiencing high call volumes today. Taxpayers are advised to use the call back option and an agent will call the taxpayer back.

eFiling downtime

Due to ongoing maintenance, eFiling may not be available on Wednesday, 16 October 2019, from 19:00 to 20:00. Our apologies for any inconvenience.

Online Bookings

Taxpayers and Tax Practitioners may book an appointment in exceptional circumstances during the lockdown period,

Auto registration for tax

Register for eFiling and you will be automatically registered for personal income tax and receive a tax reference number. Note that you must have a valid South African ID,

VAT Notice of Registration

VAT vendors can now obtain a VAT notice of registration on eFiling, by following a few easy steps. The VAT vendor needs to be a registered eFiler,

Pay all tax due by 31 March

It’s crunch time. To avoid penalties and interest, submit outstanding tax returns now and pay all tax due by 31 March,

No need to go to a Branch

Available on eFiling: Enquire on debt outstanding and make a payment, enquire on returns outstanding, Tax Compliance Status, Request Statement of Account,

R2.4 billion tax refunds

SARS has paid out refunds to taxpayers amounting to R2.4 billion over the four days of lockdown, from Friday 27 March,

Beware of scams

The latest SARS phishing scam pretends to be a letter of demand from SARS. Do not click on any links that will ask personal details, see the Scam Alert webpage for examples,

Job seekers do not need tax reference numbers

SARS does not require a person to have a tax number when employed for the first time. Employers need to register employees for income tax online,

Employers

SARS wishes to thank those compliant employers who have carried out all their tax obligations as agents for SARS, in terms of our country’s tax legislation,

Single registration

Allows taxpayers to register, maintain and view associated tax and customs registrations in a consolidated tax profile,