By Lehlohonolo Lehana.
The South African Revenue Service (SARS) says severe and frequent rolling blackouts had cost SARS up to R60 billion in tax collections.
This was revealed in Parliament on Wednesday while Sars commissioner Edward Kieswetter and other officials briefed Parliament on the entity’s annual performance plan.
The group’s chief revenue officer Johnstone Makhubu said that in the 2022 year, load shedding cost the group roughly R60 million; however, there is an immediate effect and a lag effect relating to the blackouts and tax collections.
He said that the lag effect is most likely felt in corporate income taxes over the long term.
VAT collections feel the effect of load shedding first as sales decline, said Makhubu.
SARS is likely to feel the R60 billion loss over the course of this year as load shedding persists and more financial filings are completed.
In South Africa, vendors are subject to a 15% standard VAT rate on goods and services provided, with only a select range of goods and services being exempt or taxed at a zero rate.
SARS has made a concerted effort to ensure compliance through a new binding general ruling (BGR) regarding the Value-Added-Tax Act. Under the latest ruling – more documentation is needed for creditors to substantiate input tax deductions on repossessions or the surrender of goods.
Vendors are now further required to disclose any changes to their VAT registration status to a creditor.
Despite new initiatives to enhance VAT collection, little can be done on SARS’s side when sales plummet as businesses can not conduct economic activity during blackouts.
SARS has experienced a steady upward trend, with tax collections for 2022/23 amounting to R1.69 trillion in the net collection, surpassing expectations considerably.
SARS said that this was a record total gross amount, while the over R380 billion in refunds was also the largest ever paid since its formation.