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SA's Tax System
Why pay tax
Without the revenue from tax, the government cannot do its job. The state needs your tax rands to fund social and economic programmes, and to provide public goods and services, such as schools, universities, hospitals, clinics and roads, as well as defence and security. Every year, the Minister of Finance presents the Budget, which outlines the total government expenditure for the following financial year and the ways in which this expenditure will be financed.
SARS is conscious of the importance of fulfilling its mandate to increase the revenue available to the government to rebuild the country and create an economic order in which all South Africans are prosperous. To do this, it is working hard to turn an entrenched culture of non-compliance into one of voluntary compliance, increasing the tax base while reducing the cost of collection.
Improved service-delivery and more effective enforcement of tax legislation are two pillars of SARS's compliance strategy. The ultimate goal is to reduce the tax gap, which is the difference between tax collected and tax due.
South Africa's tax system
South Africa has a residence-based system, which means residents are - subject to certain exclusions - taxed on their worldwide income, irrespective of where their income was earned. Non-residents are, however, taxed on their income from a South African source. Foreign taxes are credited against South African tax payable on foreign income.
The majority of the state's income is derived from income tax (personal and company tax), although nearly a third of total revenue from national government taxes comes from indirect taxes, primarily VAT.
Avoiding double taxation
Since tax systems differ from country to country, there is a chance that a particular amount could be taxed twice. But tax relief can be effected by a double-taxation agreement between the countries concerned. These international tax agreements are important for encouraging investment and trade flow between nations. South Africa has agreements with a number of other countries to prevent double taxation of income accruing to South Africa taxpayers from foreign sources, or of income accruing to foreign taxpayers from South African sources.
The tax register
The tax register is the number of active taxpayers. A primary objective of SARS is to grow the register and so reduce the tax gap. The level of growth is influenced by economic conditions, tax policy, legislative amendments, tax-base broadening activities and the overall compliance climate. The register comprises individuals, companies, PAYE and VAT.
Tax returns
Income tax returns are issued to registered taxpayers every year. The year of assessment for individuals covers 12 months, beginning on 1 March and ending on the final day of February the following year. Companies are permitted to have a tax year ending on a date that coincides with their financial year. The Act also provides for certain classes of taxpayers to have a year of assessment ending on a day other than the last day of February.
Tax returns must be submitted to SARS on the date given. A taxpayer may apply for extension.
Persons whose income comes from sources other than remuneration - such as a trade, profession or investments and companies - are required to make two provisional tax payments during the course of the tax year and may opt for a third "topping-up" payment six months after the end of the tax year.
People who owe SARS tax are charged interest at a rate as published in the Government Gazette in accordance with the Public Finance Management Act 1 of 1999.
Click here for an interest rate table.
To register online, please visit www.sarsefiling.co.za
To download the forms for registration please click on the links below:
2008 Tax Statistics
The 2008 Tax Statistics publication is an important milestone for National Treasury and the South African Revenue Service (SARS).
The availability of comprehensive tax revenue data is the cornerstone upon which appropriate tax policy and effective tax administration are predicated. Equally, the availability of disaggregated tax revenue data is important for academic research and analysis by private sector economists and other interested parties. For the actual 2008 Tax Statistics information, click here.
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