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Thread: Investment into SA and Taxes

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    Investment into SA and Taxes

    Doesn't it seem a bit much tax rate wise for South Africa to have taxes at 40% and vat etc? I know for some businesses it makes sense, 'relatively' cheap land and labor but with BEE which is very confusing to me looking through wiki. Seems a bit burdensome.

    It all seems to drive exports at below cost to insure profit shifting, because otherwise it defeats the purpose of being in SA.

    Even excise taxes for wine are a few multiples higher than here in the States.

    I know this might sound crude but aren't emerging markets supposed to be Lower tax, cheaper service areas.

    Hypothetically a successful winery would pay 40% income + 14% vat + around 80c to a $1 on a liter of wine. Seems a bit hefty especially if its large and has to give up 25-26% equity. Theoretically this seems like 96% taxation yes I know but it does look like a joke to me. So lets say you sell a liter for $10 and make $3 you are then down to $1.38 after vat and income assuming the excise is already in there somewhere. After partnership you get to keep 1.02-1.03 dollars. Figuring 7 years for first grapes they will be truly sour. Return on investment seems absurd, unless you get a ready to go winery someone abandoned. I guess everyone is just filtering everything through multiple jurisdictional and corporate layers to not be robbed.

    At least in other countries you could simply bribe the officials instead of going through this stupidity.

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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by cyppok View Post
    I know this might sound crude but aren't emerging markets supposed to be Lower tax, cheaper service areas.
    Not always, obviously

    Quote Originally Posted by cyppok View Post
    Theoretically this seems like 96% taxation
    There are a few problems with your maths there - but ultimately yes, all those taxes add up to a fair chunk of change. Nowhere near as heavy as in Europe, though.
    The trouble with opportunity is it normally comes dressed up as work.

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    Quote Originally Posted by Dave A View Post
    Not always, obviously


    There are a few problems with your maths there - but ultimately yes, all those taxes add up to a fair chunk of change. Nowhere near as heavy as in Europe, though.
    Yes I know (I can't count which is sad ) but was trying to make a point. In some sense if you contemplate the rebate of vat and it being higher than your profit margin on low priced wine you could say inter-temporally you are paying a tax and a game of will you get it or not back.

    Sadly my math skills are atrocious.
    But you get the point why risk capital at same burden or higher there(In SA)?

    The only theoretical in my mind is trying to get something similar to Brazil in relation to Alcohol/Ethanol/Sugar/Oil angle in the Sugar production segment, but land costs might be a bit too high to amalgamate or even control said aspect.
    http://mg.co.za/article/2012-02-20-r...etion-by-2014/

    I guess SA has a nice climate like California or something, nice and warm and whatnot I really wouldn't know.

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