The South African Revenue Service (SARS) has pledged to meet the government’s revised revenue target of R2.144 trillion for 2026, even as the country’s economic growth forecast has been cut from 1.6% to 1.2%.

Finance Minister Enoch Godongwana announced the revised estimate in the Medium-Term Budget Policy Statement this week, reflecting an increase of R17.1 billion compared to the February budget estimate of R2.127 trillion.

SARS Commissioner Dr Johnstone Makhubu welcomed the revision and said the tax authority remains committed to collecting all revenue lawfully due to the state.

Strong performance in first half

The revenue service has exceeded its targets in the first six months of the financial year, collecting R992.2 billion in net revenue by 30 September. This includes gross collections of R1.231 trillion and refund payments totalling R239.1 billion.

Net revenue came in R15.5 billion, or 1.6%, above the February budget estimate and R67.4 billion, or 7.3%, higher than the same period last year.

The performance was driven by stronger corporate income tax, domestic value-added tax and pay-as-you-earn collections, along with lower-than-expected VAT refund payments.

“The year-to-date outcome demonstrates the resilience of South Africa’s revenue system. However, as reflected in the Minister’s speech, sustainable revenue growth ultimately depends on economic expansion, investment, job creation and broad-based compliance,” Makhubu said.

Compliance efforts yield R137.7 billion

SARS compliance interventions secured a preliminary R137.7 billion in the first six months, made up of R76.3 billion in direct cash collections and R61.3 billion in prevented revenue leakage.

“Every rand recovered through compliance interventions protects honest taxpayers and strengthens the fiscal framework. Compliance is one of the most effective tools available to safeguard the integrity of the tax and customs ecosystem,” Makhubu said.

The revenue service will continue to strengthen compliance measures and protect the revenue base to meet the revised target.

Second half challenges

Revenue in the second half of the 2026/27 financial year is expected to increase by R66.3 billion, or 6.1%, to reach R1.15 trillion. The increase will be driven mainly by pay-as-you-earn, corporate income tax and domestic VAT.

The MTBPS estimate for the second half was revised upward by R1.6 billion, largely due to an R11.7 billion increase in corporate income tax. This reflects improved company profitability, with the Gross Operating Surplus projected to grow from 3.5% to 5.4%.

Despite improved electricity reliability supporting economic activity, structural constraints such as logistics and infrastructure challenges continue to limit South Africa’s growth prospects.

The revenue outlook excludes the fuel levy relief announced by the minister at the MTBPS, which aims to help South Africans cope with rising fuel costs.

Makhubu said: “The fiscal position demands disciplined execution across the organs of state and a capable, trusted revenue authority that fulfils its mandate firmly, without fear, favour or prejudice.”

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