Company Income Tax, Mining Others Decline in South Africa

Company Income Tax and mining sector taxes among other major tax contributors in South Africa are experiencing a downward trend in South Africa’s Q2 recently published analysis.

Going by the statistics, after taxes from the mining sector picked up at R31 billion in Q2 2022, taxes from company income tax dropped to just R12 billion in Q2 2023. The worrying data also highlighted that overall, company tax has dropped to R49 Billion in Q2 2023, a decline from R77 billion in Q2 2022.

The declining data from the mining sector is coming after the local sector in South Africa more than halved its contributions in Q2 of 2023.

It is important to state that the declining figure especially for the mining sector is a negative trend as the sector represents one of the country’s most important revenue streams.

On the flipside of the decline, a highlight of taxes according to their hierarchy of contribution to the economy was put up by the South Africa Revenue Service which has Company income tax (CIT) as the third largest source of government tax revenue in 2021/22.

In 2008/09, CIT’s contribution was 26.7%. This slowly declined to 15.9% in 2019/20.

After the pandemic, CIT surprised on the upside. Its contribution increased to 20.7% in 2021/22. CIT also rose in absolute terms, from a pre-pandemic R214 billion in 2018/19 to R323 billion in 2021/22.

Also, Personal income tax was the largest contributor (35.5%), followed by value-added tax (25.0%), CIT (20.7%) and other levies and taxes (18.8%).

Company Income Tax, Mining: More Perspective on the Decline

The decline in the taxes collected especially in the mining sector deals the country a great blow as the mining industry had strengthened the company tax collections after Covid- 19 pandemic. This contributed to the famous ‘commodity boom’ which contributed to the ‘glossy outlook’ on finances during the 2023 budget.

This big shocker of declining taxes from the mining sector according to experts has also further widened the growing budget deficits.

SARS’ Submission

“The rise in CIT in 2021/22 corresponds with data from Stats SA. The Quarterly Financial Statistics (QFS) survey collects financial data from enterprises in the formal business sector. It shows that the business services, manufacturing, mining and trade industries are the largest contributors to company tax,” Stats SA said.

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