R37 billion SARS tax bill for big 4 banks
JOHANNESBURG - The four major banks in South Africa Absa, FirstRand, Nedbank and Standard Bank - have paid the South African Revenue Service (SARS) around R37.7 billion in direct taxes to government in 2023.
This was revealed by the audit firm PricewaterhouseCoopers (PwC), which released its latest report on South Africa’s four major banks in March.
The report looked at the period ending December 2023, as all of the SA’s largest banks have reported their financial results by the end of March. The report showed:
Standard Bank paid R12.72 billion in direct taxes.
FirstRand paid R12.59 billion in direct taxes
Absa paid R7.98 billion in direct taxes
Nedbank paid R4.43 billion in direct taxes
“The formation of these results, which are enviable by global measures coupled with solid growth momentum continues to demonstrate the underlying franchise strength of South Africa’s major banks,’’ Rivaan Roopnarain, PwC South Africa Banking and Capital Markets Partner said.
He also said that these results illustrated that the banks had a diverse mix of businesses, Roopnarain said.
The report also said that the four banks’ combined headline earnings reached a new record annual level of R113.2 billion. In 2022, the combined earnings was R99.5 billion and therefore the growth illustrated a 13.8 per cent rise in earnings.
South Africa’s economy grew by a marginal 0.1 per cent in the fourth quarter of 2023, taking the annual growth rate for 2024 to 0.6 per cent, according to StatsSA.
“Earnings from South African major banks operations reflect various symmetries to the low-growth South
African GDP environment, which dampened overall earnings growth rates on a combined basis,” PwC said.
The research said that despite slow growth conditions in SA, and the challenging macroeconomic environment throughout 2023, SA’s major banks’ results exhibited their solid operating foundations.
“Aided by the positive endowment effect of the higher interest rate environment, the major banks continued the performance trajectory observed in the first half of the year, albeit under more difficult trading conditions than may have been anticipated at the start of the year and with the effect of interest rates on impairment charges more visible,” the PwC said.
In early April, SARS said that as of the end of March 2024, the institution has collected a record gross amount of R2.1 trillion, year-on-year 4.2 per cent against the nominal GDP of 4.9 per cent.
Terms
The figures illustrate that the tax man has collected a net amount to R1.7 trillion which is almost R10 billion higher than the revised estimate and R54 billion more than last year’s R1.6 trillion.
SARS noted that in terms of just valued added tax (VAT) refunds, the organisation drew in R343 billion and this represented a growth of 7.5 per cent over last year.
The institution said that total refunds this year, represented around six per cent of GDP. SARS has collected around R21.6 trillion in net tax revenues since its inception.
“The R21.6 trillion tax collections represents a compound growth of 9.9 per cent per year since the inception of SARS in 1997. This has funded the South African democracy and touched the lives of millions who would be destitute without government support and services,” SARS Commissioner Edward Kieswetter said.