JOHANNESBURG (miningweekly.com) − The South African Revenue Service (SARS) had collected more than R6-billion from mining royalties in the first year of their implementation, said commissioner Oupa Magashula on Friday.

Levying royalties on the mining industry for the first time was initially planned for the 2009/10 year, but the then Finance Minister Trevor Manuel postponed it to give mining companies relief from the recession and to save jobs in the sector.

Companies extracting minerals in South Africa are required to pay royalties at a rate of between 0,5% and 7% based on gross sales, less allowable deductions.

Magashula said at a briefing to announce the outcome of the country’s 2010/11 revenue collection, that SARS had also identified transfer pricing issues as a challenge in the collection of taxes within the mining sector.

He explained that most mining companies were multinationals and would often pay tax in other countries in which they operate that had lower tax levies, resulting in South Africa losing out on its fair share of revenues.

SARS, together with the African Tax Administration Forum, had identified the issue for further investigation in an effort to curb the outflow of revenue from the continent.

Meanwhile, Finance Minister Pravin Gordhan, who also attended the briefing, said that SARS had pulled out all the stops to improve tax compliance during the 2010/11 fiscal year and to identify the gaps that still existed in the system.

SARS was able to reduce its pay-as-you-earn debt book from R46,2-billion to R18,4-billion in three months for instance.

Overall, increased focus on compliance assisted SARS to collect R2-billion more than the revenue target set by Gordhan in his budget in February, at R674,2-billion.

The revenue target for 2011/12 is R741,6-billion.

“There are good indications that South Africa's economy might grow faster than we believe and with SARS further flexing its muscles, we believe that this target can be achieved,” said Gordhan.