SARS is making South Africa more like Switzerland

South Africa has become a more attractive operating environment for private business – even compared to several European countries – as recently-introduced tax changes bear fruit, says financial services firm PwC.

The company’s recent EMEA (Europe, Middle East and Africa) Private Business Attractiveness Index for 2022 showed that South Africa ranked 25th in the assessment out of 35 total territories – an improvement from 32nd in 2021.

“The country is now ranked as a more attractive operating environment for private business compared to several European countries, including Hungary, Slovakia, Croatia, Bulgaria, Greece and Romania,” said PwC.

The group said South Africa is becoming increasingly tax-friendly for foreign business.

PwC said that the regulatory environment in South Africa is now one of its leading attributes on a sub-category level, with the country now ranked 14th out of 33 countries.

“This is comparable to territories like Malta (12th) and Switzerland (15th), which are traditionally viewed as tax-friendly jurisdictions,” PwC said.

The graph below illustrates where South Africa sits as a destination for private business:

PwC’s tax controversy leader, Elle-Sarah Rossata, said that there had been noteworthy changes at SARS in recent years, which have positively impacted the interaction between the tax authority and private companies.

Developments that have bolstered the service include new leadership, the restructuring of the organisation, the allocation of resources to re-capacitate the authority in the form of people and technology, as well as bolstering tax enforcement practices.

SARS has also been on a massive hiring drive to boost the number of specialists and achieve its nine strategic objectives, such as providing a more streamlined, modern and effective tax compliance authority.

The organisation has also expanded its automated assessment system to reduce the number of taxpayers required to file annual income tax returns. Furthermore, SARS has unveiled its new Vision 2024, which aims to establish a modern and trusted organisation with high integrity.

According to PwC, out of all nine metrics the EMEA Private Business Attractiveness Index analyses, South Africa’s tax and regulatory environment ranks as the highest performing metric in 14th position.

The group provided the following graph to better illustrate the tax authority’s performance:

South African private business environment rankings (out of 33 countries).

PwC said that although the overall improvement is welcomed, several business environment challenges still need to be overcome, namely in the private business landscape.

South Africa is in the bottom third of surveyed countries in this metric,the firm said.

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