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Tax Strategies For Companies: A Necessity Or Just A Nice To Have?

Wednesday, 01 March 2006   (0 Comments)
Posted by: Author: Jennie Fourie
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Tax Strategies For Companies: A Necessity Or Just A Nice To Have?

More than 75% of businesses in South Africa do not have a tax strategy.This is one of the findings of a recent survey conducted by TaxTalk.What are the implications of this fact for companies?.In the first programme of Tax Issues, a new series on Summit TV broadcast on 03 April, Daniel Erasmus talked to Paul Jones, CEO of Lead International about companies and their tax strategies.

Paul was not in the least surprised about the absence of tax strategies in South African companies.In his experience, less than 10% of company strategies were ever implemented in any case.He himself had never come across a a tax strategy in a company.This issue was explored and the verdict was that companies don’t have tax strategies because they consider tax to be a complicated issue that should be left to professionals such as auditors. 

In so doing, companies abdicate their responsibility when it comes to tax.Daniel raised the fact that this was an irresponsible way of dealing with the issue, seeing that corporates paid 29% tax per annum. Paul reiterated that any other aspect of a business that involved 20 to 30% of its revenue would, without doubt, receive attention.He felt that a tax strategy should definitely form part of the greater company strategic plan.

What should such a strategy contain?

According to Paul, every strategy has two major parts, the first being an assessment and the second containing the actions that should be taken.In the first instance, the company’s tax history should be assessed.What pit falls and issues become apparent when looking at the tax history? Once the assessment is made, it is time for action.Companies should be cognisant of the fact that SARS is extremely vigilant in picking up non compliance these days, but once an action plan has been devised, the company has nothing to fear.

Daniel stated that in the same survey mentioned earlier, 33% of companies participating in the research felt that they were not properly tax compliant and 81% had not had a recent PAYE audit conducted.Added to the fact that 67% of companies had not had a recent VAT audit, the picture becomes grim indeed. 

The verdict of this discussion was that not only big businesses, but also SMMEs should see to it that they have a proper tax strategy in place and that professionals such as tax attorneys or auditors could as tax attorneys or auditors could assist them in setting up such strategies.

Source: By Jennie Fourie (TaxTALK)



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