JOHANNESBURG – Professional services firm PwC yesterday said it had noticed a significant move towards requirements for transparency on taxpayers tax strategy and economic contributions.
Gert Meiring, PwC tax reporting and strategy leader,said explanations of internal governance processes are recognised as evidence of tax oversight at board or audit committee level.
“Paying tax is clearly part of the economic dimension, and how companies contribute to the creation of prosperity and to stability,” Meiring said. “Other aspects of the economic dimension include creating jobs and employment, and generating business for suppliers”.
On Monday, the South African Revenue Services warned companies that from December,administrative penalties will be imposed for outstanding corporate income tax (CIT) returns.
In order to avoid sanctions, corporate taxpayers, including dormant companies, were urged to submit outstanding returns to SARS before the end of November.
Erwan Malary, a researcher at Alternative Information and Development Centre, said there was a massive transfer of wealth from workers as well as a reduction of the tax base.
“This is because capital outflows do not only erode the tax base they also erode the base for paying living wages to hundreds of thousands of workers and the base for local investments,” Malary said.
The revenue services has in recent months been on a drive to mend its relationship with big business in order to increase compliance and tax collections.
SARS has also reintroduced the large business centre,a one-stop shop that deals with companies with a turnover of R100 million a year. The centre was one of the units disbanded under the leadership of suspended SARS commissioner Tom Moyane.
The tax man which is on the hunt of R1,34 trillion in total tax collections this year has also reintroduced a team tackling illicit tobacco trade.
Arnaaz Camay, tax executive at Baker McKenzie Johannesburg, said the was a rising tide of tax disputes and companies must revisit their strategies to mitigate against risks.
“The reality of looming tax liability is one of the few certainties in life, and as such corporations should appreciate the real and material risk associated with the rise of tax disputes,” Camay said.
CIT, which has been the third largest contributor to total tax revenue for the past decade has declined from a peak of 26.7 percent in 2008/09 to 18.1 percent in the 2016/17 financial year.