The SA Revenue Service (SARS) collected only R5 million in annual corporate income tax from taxi operators, Finance Minister Tito Mboweni confirmed this week.
In a written answer to a parliamentary question from the DA about the industry's company tax contribution, Mboweni said that this amount includes tax collected from taxi employment income.
"This is because the industry does not correctly disclose income from taxi business on their CIT returns but [includes it] under a generic income source code. We were not able to determine income solely from taxi operations. Our analysis indicates that the majority of the taxi industry is declaring a nil return or are having a refund due to them."
There are some 250 000 minibus taxis operating in South Africa, according SA Taxi, the largest finance provider to the industry. Some 69% of local households use minibus taxis.
The industry generates annual revenues of an estimated R5 billion.
While the R5 million they contribute in company tax is minuscule by comparison, they do contribute billions to tax in other ways. According to SA Taxi’s estimates, minibus tax owners pay an estimated R1 billion in VAT on vehicle sales every year, as well as R7 billion in fuel levies. Their annual contribution to the Road Accident Fund (RAF) – via the RAF levy on fuel – is estimated to be R4 billion.
Mboweni says SARS is concerned about corporate tax avoidance in the taxi industry, and is adopting "targeted interventions".
"SARS has commenced a process of developing a compliance plan for the taxi industry to encourage voluntary compliance and potentially propose the appropriate tax regime specifically for the industry."
He said that this project will be concluded by the end of this financial year.
Last year, President Cyril Ramaphosa said talks had started to regulate the taxi industry. This will include measures to improve tax compliance as well as skills training and subsidies.
SARS and the Treasury have met with various taxi industry bodies, Mboweni added, and are collaborating with the Department of Transport to share data. The SARS unit focused on small and medium enterprises is also working to improving compliance in the taxi industry.
Get the biggest business stories emailed to you every weekday.
Go to the Fin24 front page.