SOUTH AFRICAN REVENUE SERVICE ANNUAL REPORT Presentation to the Standing Committee on Finance 18 September 2013 Presentation to the Standing Committee on Finance 18 September 2013

Introduction - Highlights for the Year SARS Annual Report for the year ending 31 March Progress against the SARS Strategic Plan and Annual Performance Plan tabled on 27 March 2012.

For the year under review Revenue Collected: – SARS collected R814bn; – R4bn in excess of the revised target of R810bn; – Representing 25.3% of GDP. Resources used: – SARS total expenditure % of the total tax revenue – in line with international trends; – The staff complement 14,780 ( may have reached 30,000 without modernisation The tax register – 19.5 million in total; – Comprising 15.4 million individual taxpayers and other legal entities Returns received – Over 4million income tax returns for the year (5.6m in total); – over 2million VAT returns; – over 3million PAYE returns – nearly 21million lines of customs declarations – SARS processed all personal income tax returns in an average of less than one day. Dealing with exceptions – Nearly 1.5million audits of various types, and – 1,129 investigations into possible serious tax and customs offences. – Reduced taxpayer debt by R6.4bn (including cash collected and write-offs)

Areas where we did not meet our goals for 2012/13 VAT 57.6% VAT returns filed on time (3.78% improvement) This remains a concern. The modernisation of VAT is anticipated to significantly contribute to higher levels of compliance in on time filing. VAT refunds processed within an average of working days (against a target of 21 working days) The days achievement against this measure has significantly improved from last year's baseline. 59% of all refunds were paid within 48 hours in this financial year, compared to 46% in the previous financial year. Achievement against target Commentary on performance Source: SARS Annual report

SARS collected a record R813.8 billion in 2012/13, continuing its high-growth trajectory… Total tax revenue collected R billion SARS has achieved double-digit revenue collection growth since 1994 Source: SARS 2012/13 Annual report pg ; SARS internal data +11.7% p.a.

SARS collected a record R813.8 billion in 2012/13, continuing its high-growth trajectory… Annual growth in tax collections Percentage (%)

SARS collected a record R813.8 billion in 2012/13, continuing its high-growth trajectory… Annual growth in tax collections Percentage (%)

% Revenue per tax type in 2012/13 (p17) Source: SARS 2012/13 Annual report pg. 17

Tax to GDP ratio trendline Tax to GDP ratio R billion % Source: SARS 2012/13; Annual report pg. 18

…Debt reduced by R6.4 billion…. Overdue Debt R billion % Source: SARS 2012/13; Annual report pg. 34

*Customs Revenue consists of Import VAT, Customs Duties, Miscellaneous customs & excise and Incandescent light bulb levy. Source: SARS 2011/12; Annual report pg Outcome 1 : Increase customs compliance Performance and organisational highlights Customs revenue amounted to R151.1 billion* (R0.9 billion above target) Preferred trader programme 154 traders were audited Decline in illicit economy through illicit cigarette contraband seizures. SARS seized nearly 54 million contraband cigarettes with a street value of R37 million

Source: SARS 2012/13; Annual report pg Tax Revenue (Excl. Customs) amounted to R662.8 billion (R2.8 billion above target) PIT R276.7 billion (10.1 % growth) CIT R160.9 billion (5% growth) VAT R103.6 billion (16.4% growth) Taxpayer register Total SARS register million registered taxpayers and traders (11% increase) Income Tax for Individuals register, 15.4 million (12.5% increase) Filing on time PIT % (3.47% improvement) PAYE 71.25% (4.12% improvement) Outcome 2 : Increase tax compliance Performance and organisational highlights

Source: SARS 2012/13; Annual report pg ; Declaration Compliance Total audit cases completed 1.5 million (42% increase) 246 Criminal prosecutions received a guilty verdict, resulted in fines of R21.3 million and effective prison sentences of 133 years Filing season 5.6 million returns received in filing season – 16.47% higher than 2011/ % income tax returns assessed within 24 hours 94.5% income tax refunds paid within 72 hours of submission Processing of company returns improved from nearly 3 days to less than 1 day in 2012/13 Outcome 2 : Increase tax compliance Performance and organisational highlights

Source: SARS 2012/13; Annual report pg Faster e-filing solution and new eFiling mobile solution was introduced Improve turnaround time at border posts due to the introduction of the re- engineered Customs front-end solution Better taxpayer service and quicker resolution of queries due to the introduction of the Service Escalation and Support team. Callers receive live assistance to guide them through their queries after the implementation of the new SARS Help-You-eFile service. Outcome 3 : Increase ease and fairness of doing business with SARS Performance and organisational highlights

Outcome 4 : Increase cost effectiveness, internal efficiency and institutional respectability Cost of revenue collection R billion % Source: SARS 2012/13; Annual report pg Most countries’ ratio ranges around the international benchmark of 1%, with USA at a low of 0.6 % and Germany at a high of 1.5%. Brazil and Russia’s ratio is also around 1%.

Human Capital and Employment Equity % Disability rate = 2.03% Women ratio = 62% Women in mgmt ~ 41% PDI in mgmt > 59% Human Capital numbers and Employment Equity ratios have remained stable Source: SARS 2012/13; Annual report pg. 61

Thank you

Tax revenue performance by tax type for 2012/13 Source: SARS 2012/13; Annual report pg. 16

Budget revenue performance for 2012/13 Source: SARS 2012/13; Annual report pg. 16

Global collaboration with other stakeholders StakeholderDescription of collaborative efforts ATAF WCO SARS holds the Chairperson’s position and the position of the interim secretariat of ATAF Source: SARS Annual report, pg SARS was elected as the Deputy Vice Chair of the WCO Eastern and South African Region GFTEI IBSA Mr Kosie Louw was elected as Chair for 2013/14 BRICS SARS continues to build on existing partnerships and explore new opportunities for co-operations. SARS hosted the inaugural BRICS Heads of Customs Administrations meeting. SARS championed the “Tax Inspectors without Borders” initiative and hosted the 5th plenary meeting. FTA