Construction sector – an analysis of tax revenue collected over the last decade
According to the SARS annual reports, statistics show indicate that the tax revenue generated from the construction sector has declined over the last 3 years.
In 2013, SARS reported that thy formed a partnership with the Construction industry Development Board (CIDB) and the National Home Builders Registration Council (NHBRC) to improve compliance in the industry. The revenue authority reported that the increase was mainly attributed to a key focus on this industry with a view to increase compliance in this sector. This initiative resulted in SARS putting the spotlight on the construction industry by enforcing compliance through focusing on risk profiling and enforcement initiatives. In 2013/ 2014 revenue figures increased by 22.8%, the largest increase in tax revenue generated from the construction industry to date.
In 2014 SARS reported that they achieved an 81% success rate through audits conducted on the construction industry and raised R1.76 billion in assessments of which R192.6 million was collected. Focus was on improving compliance, through more than 9 500 telephone calls to nearly 4 200 taxpayers in the construction industry during the 2013/14 financial year. This resulted in more than 1 800 cases being finalised and the submission of more than 5 000 outstanding returns. Overdue debt of around R480 million was collected. SARS referred 29 cases, with a prejudice of R52 million, to the NPA for possible prosecution. SARS will continue to focus on the construction industry.
2015 also reflected a relatively high increase in revenue numbers but has since experienced a steep decline since 2016 to 2020, reporting negative growth figures year on year.
SARS has continually indicated that they are concerned about the low levels of compliance in this industry and will focus on bolstering compliance and enforcement efforts in this regard. In the 2015 financial year SARS has recorded that they have conducted 771 audits and achieved a 91% success rate. A recovery of R34.6m in taxes was reported but this sector still remained a concern in subsequent years reporting low compliance in this sector. SARS has also reported that some matters being reported and handed over for possible prosecution with the NPA.
It appears that the construction industry has been and continues to be earmarked for audit in order to ensure an increase in compliance levels.
By Althea Soobyah
21/04/2022
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