South Africa’s top four banks, Standard Bank, Absa, FirstRand, and Nedbank are also known as the ‘Big Four’ banks. These 4 banks collaboratively paid a total of R18.6 billion in taxes during the first half of the current fiscal year.
Each bank paid different amounts, ranging from just over R2 billion to R6.3 billion. These banks saw a 16.8% increase in their combined earnings, reaching R55.8 billion.
The increase in their revenue and profits is due to higher interest rates, growth in their balance sheets, and the digitalization of their services. Market volatility also helped boost their trading revenues.
The risks have also increased. However, the banks were able to maintain strong balance sheets with enough capital and liquidity. They also made provisions for potential risks in the future.
How Much Tax Did The ‘Big Four’ Banks Pay?
The four biggest (Big Four) banks in South Africa, have paid a total of R18.64 billion in taxes in the first half of 2023. This is R1.04 billion more than what they paid in the same period last year.
Standard Bank was the largest taxpayer, paying R6.31 billion, followed by FirstRand with R5.78 billion, Absa with R4.3 billion, and Nedbank with R2.25 billion.
Significance of Banks & Taxpayers
The taxes paid by these banks are important for the South African government as they contribute to the country’s revenue. Direct taxes, such as income tax and corporate tax, are paid directly to the government.
Personal income tax, value-added tax, and corporate income tax are the three main sources of tax revenue for the government.
Only a small percentage of taxpayers, around 1.12%, contribute 30% of personal income taxes, while 19% contribute 87% of total personal income taxes.
Similarly, a small percentage of corporate taxpayers, only 0.09%, contribute 62.5% of corporate income taxes, with 4.4% contributing 95% of total corporate income taxes.
The four banks in South Africa are actually some of the largest taxpayers in the country. This is because they are big and successful businesses. They generate a good amount of income and pay a fair amount of tax on that income.
That’s good news for the South African economy! As you know, tax revenue plays a crucial role in supporting governments in essential public services such as education, healthcare, and infrastructure.