South Africa has many macro-assets attractive to investors, such as a vibrant democracy, a relatively diversi?ed economy, abundant natural resources and a transparent legal system.
The South African tax authorities collected R900-billion in tax in the past tax year, individuals received tax relief worth R45-billion and the number of registered tax payers has tripled over the past three years.
These are just some of the figures to be found in the Tax Statistics 2014 publication released by the South African Revenue Service (Sars) and the treasury on Tuesday.
The R900-billion in revenue collected in the 2013-2014 fiscal year reflects a 10.6% increase on the previous year. “This growth was supported by solid performance in customs duties (an increase of 13.3%), personal income tax (an increase of 12.4%) and corporate income tax (an increase of 11.4%),” the report said.
An amount of R45-billion was provided to individuals in tax relief. The largest allowance across the board was for travel at R26.3-billion, accounting for 28.7% of total allowances assessed.
The largest deductions, the data showed, was in contributions to pension and retirement annuity funds of R46.4-billion, accounting for 48.8% of total deductions granted.
eFiling
Meanwhile, customers have increasingly turned to Sars’s eFiling system or electronic transfers to banks as the value of payments at branch offices reduced from a high of 17.2% in 2009-10 to only 0.4% in 2013-2014.
Gauteng had the highest number of taxpayers, at 1.84-million (down from 1.9-million in the previous year) and also had the highest average taxable income of R272 188. The City of Johannesburg had the highest average taxable income per assessed individual for 2013 at R318 533. The Free State showed the lowest average taxable income of R178 251.
A change in individual taxpayer policy registrations in 2010 – which required all formally employed individuals to be registered as taxpayers regardless of tax liability – almost tripled the number of individuals on the tax register from 5.9-million on March 31 2010 to 15.4-million on March 31 2013.
The total number of assessed taxpayers has increased significantly (46%) from 3.5-million in 2004 to 5.2-million last year and is reflective of the broadening of the tax base, the report said.
In 2004 there were 758?828 taxpayers in the R60 000 to R120 000 taxable income bracket with an average taxable income amounting to R88 710. This increased to R264 093 last year.
For the 2012 tax year, Sars allowed medical deductions of R63.9-billion but in the 2013 tax year this declined to only R15.2-billion. This is because of a change in the way that medical scheme contributions are treated. “The impact of the change to medical credits for an individual with taxable income of R150 000 that has three dependants is that his effective tax rate reduces from 9.2% to 5.0%,” the report said.
Companies
The South African tax-to-gross domestic product ratio increased from 24.4% in 2009-10 to 26.1% in 2013-2014, driven by increased contributions from personal income tax and VAT.
Corporate income tax, however, “recovered more slowly as a result of assessed losses incurred by companies during the financial crisis”, the report said. Still, personal income tax, corporate income tax and VAT contributes 80% of total taxes.
Corporate income tax is the third-largest component, contributing 19.8% of total tax revenue – although not as high as its peak of 26.7% in 2008-2009, just before the recession.
The tax statistics showed that about a third of the 625 808 companies assessed had positive taxable income; a further third had taxable income equal to zero and the remaining third reported an assessed loss.
“The concentrated nature of the South African economy is evident as 299 large companies with taxable income of more than R200-million were liable for 58.1% of the tax assessed,” the report said.
Imports
With South Africa’s trade balance out of kilter, as it continues to import more than it exports, customs duties grew.
Import VAT grew by 17.6% compared with the previous year. “This was mainly the result of strong imports of capital equipment and vehicles as well as gains from a deteriorating domestic currency,” the tax statistics report said. “Customs duties … grew by 13.3% compared with the previous year. This was also a result of gains from a deteriorating domestic currency as well as strong growth in the imports of some key dutiable commodities.”
Imports from Asia and Europe accounted for 82.7% of the combined total import VAT – with customs and import duties for goods from China and Germany providing a major source of income.