Gross revenues are projected to fall short by around R15.7 billion.
Finance Minister Enoch Godongwana said gross revenue collections by the South African Revenue Services (Sars) for the next two years are expected to remain below estimates made in the Budget speech earlier this year.
This, while Sars Commissioner Edward Kieswetter said the agency has been allocated extra billions over the medium-term expenditure framework.
Godongwana was delivering the Medium-Term Budget Policy Statement (MTBPS) on Wednesday in Cape Town.
He first acknowledged that Sars expects tax collections to stay strong over the medium term, however, the taxman will collect lower than the projected amount over the next two years.
“Despite the higher-than-expected revenue performance in 2025/26, gross revenues are projected to fall short of 2025 Budget estimates, by around R15.7 billion over the next two years,” he said.
Sars revenue collection
He said the taxman collected a higher-than-expected R19.7 billion in tax revenue this year due to households spending more, which has boosted value-added tax (VAT) collections, as well as improvements in corporate tax receipts and dividend tax.
“Lower than expected VAT refunds also contributed to the improved revenue outlook,” he added. “This higher revenue allows us to bring forward some once-off expenditure.”
Godongwana noted that improved tax revenues will require more sustainable economic growth and further gains in tax compliance and administration.
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More money to strengthen debt collection
Sars was allocated an additional R4 billion earlier this year, with the aim of strengthening debt collection and increasing revenue collected by between R20 billion and R50 billion per year.
Godongwana added that government will continue to monitor the taxman’s revenue performance for the remainder of the year to determine whether it can go ahead with the planned tax increases in 2026.
“This assessment will inform whether the R20 billion in additional tax increases for the 2026 Budget, as earlier proposed, can be withdrawn. A final decision will be announced in the 2026 Budget.”
Year-on-year growth by Sars
After the Minister’s address, Sars Commissioner Edward Kieswetter said the tax agency remains committed to delivering positive results.
“The MTBPS sets out bold measures to strengthen the country’s economic resilience. Sars is committed to supporting these objectives by focusing on robust revenue collection, improved compliance and trade facilitation through consistent effort, operational excellence and innovation,” said Kieswetter.
He added that by 30 September 2025, Sars had collected a net revenue of R924.7 billion, drawn from gross collections of R1 157.6 billion and refund payments of R232.9 billion.
“This marks year-on-year growth of R78.6 billion and an overall surplus of R18 billion against the printed estimates, indicating a promising trajectory for the second half of the financial year,” he said.
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More debt collected
Kieswetter said debt collections reached R47.1 billion during the period, up R3.3 billion from the previous period.
“In the same period, Sars secured R131.6 billion from compliance activities, up from R122.6 billion in the previous year,” he added.
Kieswetter said year-to-date corporate income tax payments amounted to R164.5 billion, growing by R14.2 billion (9.5%) and exceeding the printed estimates by R4.7 billion (3.0%). Sars recorded growth of R30.9 billion in Pay As You Earn (PAYE) collections, which exceeded the printed estimate by R3.2 billion.
Dividend tax collections amounted to R22.3 billion, growing by R5.3 billion compared to the previous year, a surplus of R4.6 billion against the printed estimates.
Sars allocated an additional R7.5bn
Kieswetter said that Godongwana has allocated an additional R7.5 billion to Sars over the medium-term expenditure framework (2025/2026; 2026/2027; 2027/2028) to accelerate growth.
Speaking on achievements, he said domestic VAT collections totalled R292.7 billion, representing a year-on-year increase of R21.1 billion (7.8%).
He noted that import VAT significantly underperformed by R3.7 billion due to a lower growth (1.2%) in the value of imports, which were expected to grow by 5.4% over the full year.
Lower than expected VAT refund payments, totalled R183.9 billion, or a marginal increase of R0.2 billion (0.1%) from the prior year. While general fuel levy collections of R44.7 billion were R2.1 billion (5.0%) higher than in the prior year and exceeded the printed estimates by R2.3 billion (5.3%).
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