Weathering the storm* Budget 2009 PwC *connectedthinking Market - - PowerPoint PPT Presentation

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Weathering the storm* Budget 2009 PwC *connectedthinking Market - - PowerPoint PPT Presentation

Aug 11, 2023 161 likes •466 views

Weathering the storm* Budget 2009 PwC *connectedthinking Market capitalisation of banks Citigroup HSBC 255 JP Morgan 215 165 RBS UBS 12 116 0 19 97 85 4.6 35 June 2007/ # Jan 2008 Goldman January 2009 Societe Deutsche Sachs

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SLIDE 1

PwC

Weathering the storm*

Budget 2009

*connectedthinking

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SLIDE 2

Budget 2009 PricewaterhouseCoopers January 2009

Market capitalisation of banks

255

19

215

97

165

85

12

4.6

116

35 80 26 76 10.3 67

Societe Generale Deutsche Bank Credit Agricole

17

Citigroup HSBC JP Morgan RBS UBS

49

Morgan Stanley

16 100

Goldman Sachs

35 49.8 34.6

ABSA #

19.5 11

Standard #

12.5 7.9

Firstrand #

6.2 3.8

Nedbank #

June 2007/ # Jan 2008 January 2009

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SLIDE 3

Budget 2009 PricewaterhouseCoopers January 2009

Change in the market capitalisation of selected stock markets

‐20% ‐23% ‐26% ‐33% ‐34% ‐38% ‐39% ‐41% ‐41% ‐41% ‐45% ‐46% ‐50% ‐56% ‐64%

‐70% ‐60% ‐50% ‐40% ‐30% ‐20% ‐10% 0% JSE Buenos Aires SE Mexican Exchange London SE Australian SE Egyptian Exchange Bursa Malaysia Korea Exchange NYSE Group Tokyo SE Deutsche Börse The Stock Exchange Hong Kong Exchanges Bombay SE Shanghai SE

Annual % Change: Dec 2007 to Dec 2008

Source: World Federation of Exchanges

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SLIDE 4

Budget 2009 PricewaterhouseCoopers January 2009

Changes in house prices

US Britain Ireland New Zealand Denmark Japan South Africa Germany China Australia ‐18% ‐16% ‐14% ‐12% ‐10% ‐8% ‐6% ‐4% ‐2% 0% 2% 4% Annual % Change in Average Nominal Prices US Britain Ireland New Zealand Denmark Japan South Africa Germany China Australia

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SLIDE 5

Paying Taxes in South Africa

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SLIDE 6

Budget 2009 PricewaterhouseCoopers January 2009

A global comparison of tax compliance

Findings of the World Bank and PricewaterhouseCoopers study show that South Africa was ranked 23 out of the 178 countries for ease of compliance

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SLIDE 7

Budget 2009 PricewaterhouseCoopers January 2009

The results for South Africa 2009 (2008) Result Rank

Total Tax Rate 34.2% (37.1%) 51 (62) Hours to comply 200 (350) 73 (131) Number of payments 9 (11) 16 (24) Overall ranking 23 (61)

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SLIDE 8

Budget 2009 PricewaterhouseCoopers January 2009

  • 2

4 6 8 10 12 14 16 18 20 22 24 26 28 30 0-5 6-10 11-15 16-20 21-25 26-30 31-35 36-40 41-45 46-50 51-55 56-60 61-65 66-70 71-75 76-80 81-85 86-90 91-95 96-100 >100

Number of countries

TTR

Cost – The Total Tax Rate ranking

South Africa Rank 51

A reduction of 2.9% improved the ranking by 11 places A further 5% reduction in the TTR could improve the ranking for South Africa by 20 places

Gambia Rank 178 Vanuatu Rank 1

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SLIDE 9

Budget 2009 PricewaterhouseCoopers January 2009

  • 2

4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 0-50 51-100 101-150 151-200 201-250 251-300 301-350 351-400 401-450 451-500 501-550 551-600 601-650 651-700 701-750 751-800 801-850 851-900 901-950 951-1000 >1000

Number of countries

Time – the hours to comply ranking

South Africa Rank 23

Hours to comply

A reduction in the number of hours of 150 improved the ranking by 58 places A further reduction in the hours to comply by 50 could improve the ranking for South Africa by 21 places

Maldives Rank 1 Brazil Rank 178

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SLIDE 10

Total Tax Contribution 2007/8 Survey Results

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SLIDE 11

Budget 2009 PricewaterhouseCoopers January 2009

Average number of taxes Taxes borne

The average number of taxes borne is 8.7

2007/8

2 4 6 8 10 12 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Number of taxes reported (value or zero) Number of companies reporting data

The average number of taxes borne is 8.7

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SLIDE 12

Budget 2009 PricewaterhouseCoopers January 2009

Average number of taxes Taxes collected

The average number of taxes collected is 3.2

Data Quality 2007/8 – Taxes collected 5 10 15 20 25 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Number of taxes reported (value or zero) Number of companies reporting data

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SLIDE 13

Tax economics

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SLIDE 14

Budget 2009 PricewaterhouseCoopers January 2009

GDP over 15 years

R million

500000 1000000 1500000 2000000 2500000 1 9 9 5 1 9 9 7 1 9 9 9 2 1 2 3 2 5 2 7 2 9 GDP

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SLIDE 15

Budget 2009 PricewaterhouseCoopers January 2009

Tax as a percentage of GDP

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% Tax/GDP% 1995 2000 2005 2009

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SLIDE 16

Budget 2009 PricewaterhouseCoopers January 2009

Main sources of tax revenue

1995

Individual tax Individual tax Corporate tax and STC Corporate tax and STC VAT VAT Other Other

2010

Customs and excise Customs and excise

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SLIDE 17

Budget 2009 PricewaterhouseCoopers January 2009

Growth in registered taxpayer base

Source – Tax Statistics – SARS and National Treasury

1000000 2000000 3000000 4000000 5000000 6000000

Individuals Companies VAT vendors PAYE employers

2002-03 2007-08

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SLIDE 18

Budget 2009 PricewaterhouseCoopers January 2009

Corporate tax rates

0% 5% 10% 15% 20% 25% 30% 35% 1995 2010 Normal tax STC

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SLIDE 19

Budget 2009 PricewaterhouseCoopers January 2009

Reducing the inflationary impact for individuals

100000 200000 300000 400000 500000 600000 1995 2010 Tax threshold <65 Tax threshold >65 Maximum rate threshold

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SLIDE 20

Budget 2009 PricewaterhouseCoopers January 2009

Which income group received the largest cash benefit?

20000 40000 60000 80000 100000 120000 R 100,000 R 250,000 R 500,000 R 1,000,000 Tax saving

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SLIDE 21

Budget 2009 PricewaterhouseCoopers January 2009

Which income groups contribute the most tax?

0% 10% 20% 30% 40% 50% 60% 70% 80% <R150000 R150000– R300000 >R300000 Assessments Tax assessed

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SLIDE 22

Budget 2009 PricewaterhouseCoopers January 2009

Tax administration has changed

  • Formation of consolidated revenue service
  • Large business centres in major areas
  • Audit and risk focused
  • Specialised units
  • Revenue targeting
  • Stricter enforcement
  • New GAAR and reportable arrangements
  • Advance ruling mechanism
  • Online filing
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SLIDE 23

Budget 2009 PricewaterhouseCoopers January 2009

Tax law and practice has changed

Base broadening

  • Worldwide tax
  • CFC imputation
  • Capital gains tax
  • Skills development levy

Relief

  • Group relief
  • Learnership allowances
  • Broad-based employee share schemes
  • Building allowances
  • Plastic bag levy
  • Electricity levy
  • Mineral royalties
  • Exchange differences
  • Interest recognition
  • Executive share schemes
  • Transfer pricing
  • VAT on financial services
  • Administrative penalties
  • Small business relief
  • Micro business simplification
  • Venture capital companies
  • Strategic industrial projects
  • Environmental investment
  • Wider tax treaty network
  • Participation exemption
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SLIDE 24

2009 amendments

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SLIDE 25

Budget 2009 PricewaterhouseCoopers January 2009

Tax highlights

  • Corporate tax rates unchanged
  • Inflationary relief for individuals
  • CGT reform for primary residences
  • Mineral royalties deferred
  • Environmental fiscal reforms
  • STC to be replaced late 2010
  • VAT rate remains at 14%
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SLIDE 26

Budget 2009 PricewaterhouseCoopers January 2009

Tax highlights (continued)

  • Travel allowances “deemed” mileage to go in 2010/11
  • Deduction to be allowed for post-retirement medical aid

expenditure by companies

  • Additional 15% deduction for energy saving investment
  • Exemption or CGT treatment for CER certificate proceeds
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SLIDE 27

Budget 2009 PricewaterhouseCoopers January 2009

Indirect tax

  • New and increased environmental levies
  • Plastic bag levy increased from 3c to 4c
  • Incandescent light bulbs to be taxed at R3 per bulb
  • CO2 emissions factored into ad valorem vehicle taxes
  • International air passenger departure tax increased:
  • R150 (R120) and
  • R80 (R60) for SACU destinations
  • Fuel and RAF levy increases:
  • Petrol 40.5c/litre
  • Diesel 41.5c/litre
  • Increased excise duties on tobacco and alcohol
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SLIDE 28

Budget 2009 PricewaterhouseCoopers January 2009

Taxes: Individuals – What’s in it for me? Taxable income 2009/2010 2008/2009

R100 000 R8 244 R9 720 R33 430 R64 920 R138 730 R338 730 R200 000 R31 004 R300 000 R61 004 R500 000 R133 704 R1 000 000 R333 204

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SLIDE 29

Budget 2009 PricewaterhouseCoopers January 2009

The taxpayer in court

  • The taxes and issues
  • Income tax

14

  • STC

2

  • VAT

2

  • Other

7

  • The score
  • Taxpayer

9

  • Tax collector

16

  • Notable issues
  • Attachment of assets
  • VAT evasion
  • Punitive costs
  • Trading stock
  • Tax avoidance
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SLIDE 30

Budget 2009 PricewaterhouseCoopers January 2009

SARS developments

eFiling

  • Automated data capture
  • Employees tax recons and

IRP5 forms

  • Tighter filing deadlines this year

Audit focus

  • Tough times
  • Tough measures
  • Audit intensity may increase
  • Focus issues
  • Trading stock
  • Zero-rated supplies to non-

residents Notified administration initiatives

  • More frequent employees tax recons
  • Extension of enforcement to UIF

and SDL