The formal South African Enterprise Sector is critically ill. Were the company tax returns of the 768 000 companies combined and submitted as that of a single entity (say SA Amalgamated (Pty) Ltd) there would not have been any Company Income Tax (CIT) payable to SARS for three consecutive tax years.
SARS data on Company Income Tax (CIT) confirms the private
sector is in a dismal state. In the tax years 2014 – 2016 assessed joint losses
of all companies surpassed joint taxable income by R445 billion.
SARS data on CIT from 2007 to 2016 on assessed CIT returns bring the following to the fore (see Figure 1 below):
Pres Ramaphosa’s announcement that four special ambassadors – including well respected Trevor Manuel – are to roam the globe in an aggressive pursuit of foreign investment “… like a pack of lions”, appears to be premature. It would have helped these ambassadors if they could have had a better story to tell than one of a business environment with stagnating profitability and growing losses where:
only 25% of firms have earned sufficient to be liable for company tax;
firms with a taxable income below R10 million decline at a rate of 31 per week;
a mere 635 companies are responsible for 77% of company tax;
from 2009 to 2015 company losses as submitted to SARS increased by 85% and for the last two years were higher than the taxable income assessed.
SARS data for tax years 2009 to 2015 (for the latter 95.4% of company tax returns have been assessed) as indicators for the health of the South African enterprise landscape, show the business devastation of the Zuma administration (5 with Motlanthe and 4 with Ramaphosa as deputy). This administration, responsible for mismanaging the macro-environment and overseeing the collapse of the police force and education quality and a rise in crime and corruption, critically damaged the enterprise environment.
EOSA 