Companies contribute R134 billion to Fiscus

A new survey shows SA's larger companies contributed R134 billion to the fiscus in their financial years up to a March 31, 2009 cut off, a survey.

The R134 billion consisted of R61 billion of their own taxes borne, and a further R73 billion collected on behalf of the revenue authorities.

The third annual PricewaterhouseCoopers (PwC) Total Tax Contribution (TTC) Survey for large South African companies -- in which 45 companies participated -- showed that despite the recession, the country's largest companies continued to contribute a significant proportion of the country's overall tax receipts.

It also emphasised that larger companies paid many other business taxes, apart from corporate income tax and acted as important collecting agents for the South African Revenue Authorities.

"The services that large companies perform as unpaid tax collectors represent a valuable contribution to the fiscus and the national economy," PwC director responsible for the South African TTC initiative Charles de Wet said in a statement.

Participating companies in the current survey reported a decline in profitability as compared to 2008, with profits being some 14 percent lower on average.

Nevertheless, taxes borne by these 45 companies increased 12 percent, the survey found.

They paid taxes on income and profits (i.e. corporate income tax, mining taxes, secondary tax on companies, and tax on retirement funds) in excess of R50 billion -- more than 27 percent of government's total receipts from these sources.

An additional 34 cents in other business taxes was borne for every R1 of corporate income tax incurred.

Taking into account these other business taxes, such as customs and excise duties, irrecoverable value-added tax, fuel-related and transaction taxes, the total taxes borne by participating companies exceeded R61 billion, representing almost 10 percent of total estimated government taxation receipts from the relevant taxes, according to the survey.

According to Paul de Chalain, tax leader of PwC in SA, similar surveys conducted in other countries showed the total tax rate in SA was not out of line with other jurisdictions. Canada had the lowest total tax rate, at 27 percent, with the highest being Belgium, at 52 percent. "South Africa, at 33 percent, compares closely with the Netherlands, at 31 percent, and India and Australia, both at 35 percent," he said.

On average, for every R1 of corporate income tax borne, participating companies collected and paid over taxes of R1.60.

According to the survey, approximately 36 percent of the R73 billion collected and paid over to Sars was in respect of employment taxes (pay-as-you-earn and the Unemployment Insurance Fund levy), with three other large sources -- excise duties, fuel levies, and value-added tax -- each accounting for approximately 20 percent.