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Financial reporting

Financial reporting


Taxes paid and collected in South Africa

The Naspers group is a large contributor to the South African fiscal. In the 2019 financial year, the Naspers group paid and collected R6.9bn (US$479m) in taxes in South Africa.

This accounts for 41% of taxes paid and collected by the group globally. In the past financial year, in South Africa, the Naspers group paid and collected R1 687m (US$116m) in corporate income tax, R2 814m (US$194m) in VAT, R1 406m (US$96m) in employee taxes and R1 042m (US$72m) in other taxes.

An economic impact assessment (EIA) model is used to capture Naspers’s economic contributions. 

The EIA model measures how Naspers affects different industry clusters and sectors in the South African economy. Naspers’s interdependencies within different sectors of the economy both upstream and downstream, are identified. 

The size of the additional economic activity generated by Naspers’s interdependencies are calculated using the multiplier effect. 

The different rounds of the multiplier effect, from the initial spending in the sector, through to employees spending their salaries on goods and services (and its resultant effects), indicate the induced tax contributions made to the economy. The induced tax for 2019 is R16.5bn, and together with the direct and indirect taxes, this adds up to a total tax contribution of R23.4bn. 



During the 2019 financial year, MultiChoice Group (MCG) paid and collected US$569m globally. 86% of this was generated on the African continent, and US$374m in South Africa alone.

The 2019 figures include only 11 months of the MCG operations, up to the unbundling date of MCG on 4 March 2019. 

It is difficult to compare the 11 months’ figures for the 2019 reporting period for MCG with last year’s figures as a result of statutory payment terms, resulting in back-loading of taxes like corporate income tax in the last month of the financial year (which falls outside the 11-month period in which MCG was part of Naspers). Exchange rate differences result in a further significant (22%) dilution of the total taxes paid and collected in the 2019 financial year compared to those in the previous year. 


Taxes paid and collected globally

Globally, the Naspers Group paid and collected US$ 1,170m in taxes in FY2019.



The tax payments and collections on behalf of revenue authorities show an increase in 2019 across all tax types, except for corporate income tax, compared to 2018.

This increase in taxes paid and collected is a reflection of the trend that our businesses across the globe are reaching maturity and profitability. The slight drop in corporate income taxes paid is a result of the fact that the second provisional payments for MCG’s corporate income tax payments in South Africa are not included in these figures as the payment deadline was 31 March 2019, which falls after the date of MCG’s unbundling.

If the taxes paid and collected by MCG are eliminated, the global tax contributions for the Naspers group adds up to US$602m. Excluding MCG, 45% of the total tax paid and collected by the Naspers group is paid and collected in Europe, 23% in Asia, 18% in South Africa, 14% in Latin America and 1% elsewhere. 

Latin America shows a slight growth of 1% in 2019 compared to 2018, while the tax paid and collected in Europe and Asia shows growth of 7% and 6% respectively. This is driven by the improved profitability of the businesses in those markets.

We are seeing an increased number of businesses reach scale and profitability, with profitable businesses now contributing 50% of e-commerce revenues. 







Effective Tax Rate

Naspers continues to show a meaningful normalised effective tax rate of 29.0% for the 2019 financial year. The group accounts for its share of the results of its equity-accounted investments net of the taxation recognised by those investments. In order to provide a more comparable effective tax rate, the tax recognised as part of the group’s share of the results from equity-accounted investments is included, for purposes of the calculation of the normalised effective tax rate, in the total tax recognised by the group. 

Furthermore, exceptional items like tax-free capital gains on the sale of subsidiaries are excluded from the profit before tax to arrive at the normalised effective tax rate of 29.0% 


Sustainable tax

At Naspers, we believe in the power of local backed by global scale and we look for opportunities to address significant societal needs in markets where we see growth potential. With this strategy, we aim to create long-term value by improving lives. We are proud to make a positive difference around the world. We create value in a number of ways, for example through the companies we back and the people we employ. We also recognise that the taxes we pay contribute to long-term value creation, helping to build stronger economies in the countries in which we invest, work and live. By adhering to our tax principles and paying taxes where we operate, Naspers supports local governments in generating resources, therefore our taxes form an important element of our broader economic and social contribution to the countries where we operate. 

In order to get a holistic view of Naspers’s contribution to the South African economy and how this supports local government, we conducted
a two-step approach.
 
  1. Firstly, we calculated our total tax contribution, including direct taxes, indirect taxes and induced taxes (using the Economic Impact Assessment model).
  2. Thereafter we estimated Naspers’s social impact. The basis for this analysis is the government spending portions as per National Treasury’s budget. Naspers’s total tax contribution is divided in the same ratio as per government spending.

In this way, Naspers, through its tax contributions, is able to contribute to the funding of national social objectives. As an illustrative example, Naspers’s total 2019 tax contribution to South Africa’s National Treasury is able to feed 77 146 children, finance 1 794 hospital beds and 481 doctors, 6 549 educators, 5 014 low-cost houses and 6 327 police officers.