South Africa continues to hold its own against its international peers in terms of its tax regime and culture, emerging twentieth overall out of 189 economies polled as part of professional services firm PwC and the World Bank’s ‘Paying Taxes: 2016’ report.

While this represented a one-position slip from the previous year, it demonstrated a high level of compliance by the private sector and ratified the country’s position as a top global performer in terms of the number of tax payments made.

“At seven, South Africa is a leader when it comes to the number of tax payments made, owing to the widespread use of electronic filing.

“However, this may represent a significant risk to South Africa’s future overall ranking, as more countries introduce electronic payment systems,” PwC South Africa tax policy leader Kyle Mandy told a media briefing on Wednesday.

Despite the country’s solid 2015 showing, it was not the highest ranked African country, with this position occupied by Mauritius, in thirteenth position overall.

The overall rankings were dominated by the Middle East region, with the first three positions taken by Qatar and the United Arab Emirates, in joint first place, and Saudi Arabia, in third position.

Returning to South Africa, Mandy added that, while the country’s total tax rate of 28.8% compared favourably with global and regional averages, it ranked behind several of its African peers, including Zambia (18.6%), Namibia (21.3%), Mauritius (22.4%) and Botswana (25.1%).

The average total tax rate for the Brazil, Russia, India, China and South Africa grouping was 54.7%, he noted.

“Also cause for concern is South Africa’s relatively high rate of profit tax, at 21.7%, which is well above the global and African averages of 16.2% and 17.7% respectively, and where it ranks 135th out of the 185 countries polled.

“There is a risk that [South Africa’s] total tax rate will increase in the future, as pressure mounts to introduce new taxes on business to fund increasing spending pressures,” Mandy maintained.

At 200 hours, the time taken for South African companies to comply with their tax obligations had declined significantly as a result of the introduction of online filing, with several improvements made to streamline the tax system in recent years.

Global tax reforms introduced over the past year had seen the accelerated introduction of electronic tax payments and online filing, which had largely benefited developed economies.

The speed and ease with which taxes could be filed in low-income economies, however, which often had a substantial compliance burden, remained fettered by a lack of modern communication infrastructure and electronic payment systems.

The report found that, on average, the global company had a total tax rate of 40.8% of commercial profits, made 25.6 tax payments a year and took 261 hours to comply with its tax requirements.

Despite some improvement to its showing, economies in South America demonstrated the highest average total tax rate, at 55%, and the highest average compliance time of 615 hours.

This was following by African economies, which had an average total tax rate of 46.9% and an average compliance time of 313 hours.

“Over the study period, Africa is the region with the greatest reduction in its average total tax rate, which is largely as a result of the abolition of cascading sales taxes in a number of economies.

“Over the last ten years, the average total tax revenue fell by 22.5 percentage points,” Mandy revealed.

He further argued that there was considerable scope for the reform of global tax systems in terms of simplification and supporting compliance.

“This year’s report demonstrates, in particular, the unavailability of information technology infrastructure, including broadband, in developing countries, which is needed to design and run a modern tax system,” he concluded.