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22 January 2016 – Tax returns give insight into economic performance

22 January 2016 – Tax returns give insight into economic performance

Pretoria, 21 January 2016 – The National Treasury and South African Revenue Service will host a special workshop on the potential of tax administration records to provide insight into firm growth and performance, and hence economic growth.

This will take place at the Linton House Auditorium at Brooklyn Bridge that houses SARS offices in Brooklyn, Pretoria from 9am.

There is now a set of data for Corporate Income Tax (CIT), Personal Income Tax (PIT), Value-added Tax (VAT) and international trade spanning approximately six years that is being utilised for economic and policy research. The anonymous records hold information from more than 600 000 companies registered for various taxes.  Some preliminary findings will be announced.

SARS will be taking over the secure data facility developed by National Treasury, including the hardware and software acquired for the project, by December 2016.

This will provide a core set of research databases to which new tax administrative data could be added, as well as administrative data from other organs of state in due course.

The wide coverage of tax data makes it particularly suitable for assessing how firms with different trading or investment strategies perform over time. Also, it can be used for studying smaller firms that might not be covered in sample surveys.

SARS provided anonymised tax records to National Treasury for piloting firm-level studies.  Funding provided by the United Nations University’s World Institute for Development Economics Research (UNU WIDER) covered the acquisition of dedicated hardware and software. The anonymous tax records were converted into a format suitable for research purposes.

There is growing demand for a robust evidence base for tax policy formulation and evaluation, fiscal decision-making and action in our country.

“Many countries have successfully employed public administrative data sources, that is, data produced as a by-product of administration, for improving the policy value chain. These records relate to engagements of the government with individuals – both natural and legal persons – that can consequently be used to track the changing circumstances of people and businesses. This contributes a better understanding of inequality and income dynamics and hence how to improve the lives of South Africans.

“SARS is rightfully pleased that the use of administrative data is beginning to add significant value to socio-economic research in South Africa, and paving the way for continent-wide application,” says Dr Randall Carolissen, a SARS Group Executive.

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