Contrary to popular perception, large companies are not pussyfooting around the taxman.
Fifty of South Africa’s largest companies contributed R49,6-billion in taxes last year, while collecting an additional R52,8-billion from their customers and employees on behalf of government, according to a report by auditing firm PricewaterhouseCoopers (PWC).
But as the global economy begins to pinch company bottom lines, this large intake may shrink.
Participants in the survey include Anglo American, Sasol, the JSE, Unilever and British American Tobacco.
Taxes contributed by the participants represent 9,9% of total estimated government taxation receipts, according to the report.
The report separates the total tax contribution of companies into taxes borne by the companies — which impact directly on their accounts — and loss account, such as corporate tax, as well as taxes collected by the companies from staff and customers, which include taxes such as PAYE, VAT, excise duties and the fuel levy.
PWC calculates that for every R1 borne by the companies, another R1,07 was collected on behalf of the government. Taxes collected represent about 16,4% of the total government taxation receipts.
”Tax is moving up the corporate agenda,” says Charles de Wet, director and tax partner at PWC.
Government has indicated its belief that large corporates are ”very aggressive in tax planning” and the report gives an indication of how much big business actually pays. The contribution these companies make to the fiscus is ”crucial”, De Wet says.
”It astounds me that just 50 companies account for 10% of tax collected,” says De Wet.
The report also compares South Africa with the United Kingdom and Australia. In both cases South Africa compared fairly well with its international counterparts.
South African corporate tax as a percentage of GDP stood at 6,3%, while in the UK is was 9,1%.
Australia, however, imposes a much larger tax burden on its corporate community. Corporate tax to GDP stands at 27% down under. And although companies in South Africa and the UK pay 23 and 22 different kinds of tax respectively, Australian companies must contend with 55.
”In international terms South Africa seems to have come out quite well,” says De Wet, especially in terms of the number of taxes and rate of taxes.
The report indicates that a large portion of big companies — 57% to be exact — feel that the South African Revenue Service (Sars) unduly targets large corporates for cash collections. ”Treasury and Sars need to take heed of it and need to be fair,” says De Wet.
A good relationship between the taxman and the nation’s corporates is more important now than ever, as the global economic outlook changes for the worse and fat company profits start to thin out.
”If profits are down because of the global economy, it will make it difficult for Sars to meet its targets,” says De Wet. ”It could severely impact on government revenue. If the economic growth of the country shrinks it must impact on how much tax will be paid.”
In South Africa there are divergent views on tax issues, says De Wet. Some observers argue that even at 28% corporate tax is too high, but South Africa is not badly positioned against other countries.
”Lower tax rates will always encourage investment, but at the same time we need to make sure there is enough money for infrastructure and so on,” says De Wet.
He pointed out that South Africa is a developing country with a developed world tax regime.
The legislation is devised to ensure that large companies and multinationals comply with the tax requirements, but these can be complicated and quite a burden to smaller businesses says De Wet.
