THE top 50 companies spent R144,8m to comply with the tax laws last year, says a new study released by PricewaterhouseCoopers (PwC) yesterday.
... This included R64,2m on salaries and related overheads and R80,6m paid to external tax service providers.
Charles de Wet, the PwC director responsible for the South African total tax contribution project, said: “Tax compliance costs include more than just the cost of submitting a tax return, and refer to the total cost incurred by a company to meet its obligations with regard to South African taxes.” The study included a broad spectrum of companies from the retail, manufacturing and financial services sectors. Companies such as Anglo American, Harmony, Massmart, Netcare, Shoprite Checkers, Unilever, Vodacom and Woolworths took part.
The companies were asked to complete a detailed questionnaire in respect of taxes paid and collected during their latest financial year that coincided with the 12 months to March last year. On average, the equivalent of 4, 4 fulltime employees per participant in the study dealt solely with tax compliance. Just over half of the time spent by employees on tax compliance was on activities relating to corporate tax (50, 3%), 18 ,9% of time was spent on employment taxes, and 13, 2% on value-added tax (VAT).
Each participant spent R1 ,6m on average with a variety of external tax service providers for various tax compliance services. Just over half of the companies (57%) believed that corporates were being unduly targeted for cash collections by the South African Revenue Service (SARS). While 67% considered SA’s tax legislation to be highly complex, 71% of organisations rated the quality of the SARS website to be sufficient to resolve tax issues.
The data collected was reassuring from a corporate governance perspective as 86% of companies had a formal tax reporting structure to management in place, and 73% indicated audit committee involvement in the management of tax risk. Edward Kieswetter, chief operations officer at SARS, said last week at the inter-American centre of tax administration technical conference, that SA was very dependent on its large businesses for direct and indirect taxes.
Between 60% and 70% of revenue was collected from large businesses every year, Kieswetter said. For the financial year ending March 31, SA’s large business centre (which caters for such organisations) managed to collect in excess of R203bn, representing more than 35% of total revenue collected. The centre carried out 2 307 audits yielding an extra R6, 8bn in assessments. “There was a perception that large companies did not pay as much tax as they should. Such perceptions are seldom supported by empirical data and are frequently based on generalisations, speculation and innuendo,” said De Wet.