South Africa's historic tax reform is considered one of the most important reasons for the country's strong economic growth in the last few years.
Many South Africans, both wealthy and poor, have benefited from the increased standard of living. All South Africans over 65 are entitled to a pension and the social security system for the most vulnerable people in society has significantly improved.
At the same time the budget deficit, which was about 5% 10 years ago, has become a budget surplus of about 0.3%.
The South African Revenue Service, SARS, initiative, which started in 1998, received Swedish support amounting to some 30 million rand. The support was channelled through the Swedish National Tax Board, which helped SARS develop efficient IT systems and offered strategic advice on how to simplify tax collection and isolate the largest tax collection areas.
In 2004/2005 SARS collected 21 billion rand more tax money than expected.
“We know for a fact that our advice about auditing large corporations has been very efficient. SARS had a feeling that companies before used to pay taxes a little bit as they felt like," says Gösta Wilholm, head of the project at the Swedish National Tax Board´s international department.
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