World Economy

South Africa May Miss Tax Target

South Africa May Miss Tax TargetSouth Africa May Miss Tax Target

South Africa’s tax take could well be lower than forecast this year, with a downturn in the economy exacerbating problems at the tax revenue service, Finance Minister Nhlanhla Nene said on Monday.

The country entered recession in the second quarter for the first time since 2009, Reuters reported.

Nene said tax avoidance and evasion would rise in any economy that was growing slowly and where taxes have been increased, and the recession would only worsen matters.

 “There is now additional downside risk to the tax revenue projected at the beginning of the year because of the contraction in the economy,” Nene told a tax conference.

“Fixing our economy to ensure that it grows faster and in a more sustainable manner is therefore critical.” Nene also cited problems experienced by the South African revenue service.

President Cyril Ramaphosa suspended its commissioner Tom Moyane in March over alleged misconduct during the previous administration of Jacob Zuma, establishing an inquiry into the allegations two months later. Moyane has denied wrongdoing.

 Banks Rake in Profits

South Africa’s big banks continue to rake in profits despite a subdued economy and a rise in policy uncertainty bedeviling the economy, IOL reported.

The PricewaterhouseCoopers study on the four biggest banks in the country showed the lenders posted combined profits of R40.4 billion ($2.67 billion) in the six months ended June, up 12.1% year on year against the first six months of 2017.

The study further found that during the period under review, combined return on equity, or ROE, grew by 15 basis points to 18.8%.

The report released on Friday looked into the combined local currency results of Absa, FirstRand, Nedbank and Standard Bank.

“It is evident from the results of the major banks that they have continued to spend considerable time and cost on their digital strategies, refining and simplifying products and enhancing their loyalty programs,” said Costa Natsas, the banking and capital markets leader for PwC Africa.

Standard Bank last month published its interims results, which showed its profits of R12.7 billion, up from 5% in the prior period and ROE of 16.8% from 16.1% before.

Absa’s retail and business banking unit posted a 4% climb in profit to R4.2 billion in the six months to June. The country’s biggest bank by market capitalization, FirstRand, delivered an 8% increase in profits to R26.5 billion for the year ended June, while Nedbank reported a 27% surge in first-half earnings to R6 billion.

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