The South African Revenue Service (Sars) collected just over R2-trillion in gross tax revenues over the past year, a 9.7% increase from the 2021/22 tax year. The gross revenues were R123-billion, above what the finance minister estimated in the 2022 Budget speech.

This was the first time that Sars exceeded the R2-trillion gross tax revenue mark. But it was R5-billion below Sars's own revised estimate.

"Basically, for all intents and purposes, we have achieved what the [finance] minister set us out to achieve," said Sars Commissioner Edward Kieswetter. 

Total tax refunds surged by almost 19% to more than R381-billion, with value-added tax (VAT) refunds increasing by almost 22% to R319-billion. 

"We've seen a higher than usual growth in VAT refunds. In fact, it's the highest we've ever paid out. The R381-billion is R60-billion more than last year," said Kieswetter.

Sars said the refunds were primarily driven by capital investments by companies.

Sars chief revenue officer Johnstone Makhubu said that while zero-rated exports largely drove the refunds, Sars saw a significant increase in capital investment imports.

The head of the large business unit in Sars, Narcizio Makwakwa, said the capital investments included maintenance due to load shedding damage.

For instance, in the mining sector, while companies invested in extending the life of their mines, there was also an increase in maintenance investment.

"When they run some of their equipment, and there is loadshedding up and down, it does affect their smelters, and some of them get damaged in the process of being on and off," said Makwakwa.

More companies have been repairing and replacing equipment affected by power outages in the past year. Insurers have also flagged the massive jump in power surge claims because of the power cuts.

Loadshedding is affecting companies' profitability too – a double whammy for Sars, as it collects less corporate income tax from those affected while paying higher refunds.

The mining sector, which blessed Sars with a tax collection windfall in the previous year, had a less buoyant year. Commodity exports were lower as the demand from China fell. Transnet's railing problems also throttled companies.

"We do think that has got some linkage to the Transnet's ability to assist in the evacuation of those minerals. But also, we feel that load shedding that is in the background affects miners," said Makhubu.

As loadshedding continues, Sars expects corporate income tax to lag because some smaller businesses aren't coping. It said the first six months of the new tax year will be telling.

In the past year, tax collection from fuel levies was affected by National Treasury's decision to  temporarily reduced the general fuel levy to smoothen the impact of higher fuel prices on consumers and businesses last year.

Makhubu said the tax agency estimated that refunds would amount to around R314-billion over the past year. Because of the high level of refunds, Sars ended the year with R1.7-trillion in net tax revenue, a 7.9% increase from the previous tax year.

But Sars still ended up with a tax buoyancy of 1.36%. This tax buoyancy means that tax revenues in the country are growing faster than the GDP.