Rowan Callaghan
Global investors rate competitive tax rates a=20 surprising fifth behind currency, political stability=20 and infrastructure on a list of criteria to evaluate=20 countries’ suitability for investment devised for Ernst=20 & Young’s Strategic Trends report.=20
A survey of 230 investors was conducted for this year’s=20 report which, for the first time, details world tax=20 trends and explores the problems other countries have=20 experienced and which we have yet to encounter.=20
“South Africa’s high corporate tax rate, particularly=20 given the addition of STC (secondary tax on companies)=20 on distributed earnings and withholding tax on=20 dividends, has been somewhat softened by the abolition=20 of withholding tax from October 1 1995. The phasing=20 out of STC is also likely but this tax may well be=20 placed in an imputation system,” states the report.=20
It seems, however, unlikely that tax rates will drop=20 below a cumulative 40 percent in the next five years.=20 This means South Africa will remain marginally=20 uncompetitive when compared with other countries.