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Weak economy cuts number of South African companies paying tax – The Guardian

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JOHANNESBURG (Reuters) – Nearly half of companies in South Africa had no taxable income in 2017 while a quarter recorded a taxable loss, the South African Revenue service said on Monday, based on its latest 2017/18 data, highlighting the impact of weak economic growth.

The revenue service said based on its 2017 data, 48.3% of companies had taxable income equal to zero, 27.4% reported an assessed loss, and 24.3% had positive taxable income. Companies have up to 12 months from the end of their financial cycles to submit tax returns.

“The decline can largely be attributed to sluggish economic growth, structural challenges in some sectors of the economy, low confidence levels and political uncertainty,” the revenue service said.

“All of these factors play a role in subdued investment activity, resulting in lower profitability for companies.”

In the revenue service’s 2019 Tax Statistics, which measures revenue collection from 2014/15 to 2018/19 fiscal years, revenue collection for the current year ended March reached 1.287 trillion rand ($90.25 billion), short of a target of 1.302 trillion rand.

The collector said companies submitting returns had fallen 36.9% to just over 2 million for the 2018/19 fiscal year, partly due to many being considered “inactive or dormant”, while only 63.4%, or 572,000, of companies expected to submit returns had complied.

Tax revenues have fallen sharply in South Africa since 2015 due to weak economic growth and maladministration.

In addition, nationwide electricity blackouts, forcing mines and small businesses to shut down, have put more pressure on the economy and government finances.

In October, the National Treasury said the budget deficit would jump to 5.9% of gross domestic product by 2020, its highest since 2009/10, and likely reach a 6.5% deficit in 2021, well above government’s target of 4.5%.

($1 = 14.2606 rand)

(Reporting by Mfuneko Toyana. Editing by Jane Merriman)

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Vietnam PM promises economy will rebound from COVID-19 hit | Saltwire – SaltWire Network

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HANOI (Reuters) – Vietnam’s exports are likely to rise 10.7% in 2021, with annual inflation expected below 4%, the prime minister said on Wednesday, promising lawmakers that economic revival lay ahead.

Pham Minh Chinh told the national assembly that Vietnam, consistently one of Asia’s fastest-growing economies, had been badly hit by the coronavirus, which disrupted its supply chains and hit workers in key industries.

Vietnam’s gross domestic product (GDP) contracted 6.17% in the third quarter of 2021 from a year earlier as the containment measures hit, the sharpest quarterly decline on record.

Chinh said he expected GDP to expand 6.0% to 6.5% next year, with the government aiming to cap inflation at 4%.

“Realising 2022 targets is a heavy task, but we definitely will revive our economy,” he said, despite the pandemic having put macroeconomic stability at risk.

“Inflation is facing upward risks and there have been disruptions in the supply chains … workers’ lives have been badly hit.”

Although Vietnam had largely reined in COVID-19 until May, a fast-spreading outbreak of the Delta variant in its economic hub of Ho Chi Minh City led to wide curbs on movement and commerce, hitting key manufacturing provinces nearby.

This month, the government said Vietnam would miss its garment exports target this year, by $5 billion in the worst case, hit by curbs and a shortage of workers.

It expected $34 billion of textile exports, shy of the targeted $39 billion, and a shortage of 35% to 37% of factory workers by year-end, it said.

Ho Chi Minh City has suffered a mass exodus of workers since lockdowns eased last month, on worries they would get stuck again if there was another wave of infections.

(Writing by Martin Petty; Editing by Kim Coghill)

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Opinion | Evergrande Isn’t China’s Only Economic Worry – The New York Times

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Crushed by $300 billion in debt, Evergrande, one of China’s biggest property developers, is sliding toward bankruptcy. This has prompted fears of a wider property crash or even a financial crisis.

But this is hardly the only crisis besieging the government of Xi Jinping. An unexpected electricity shortage threatens to slow down manufacturing. And for the past year, the government has waged a fierce campaign to regulate China’s vibrant internet companies, spurring hundreds of billions of dollars in investor losses.

The common feature of these crises: All were triggered by government policies. In the eyes of Beijing, these policies are meant to fix deep structural problems in the economy and lay more solid foundations for future growth. To many outsiders, they represent a dispiriting retreat from the market-oriented reforms of the past and signal the end of China’s long economic boom. But forecasts of China’s doom are most likely mistaken, as they have so often been.

True, in the latest quarter, economic growth slowed to a crawl, growing by just 0.2 percent compared with the previous quarter. The next several months will be rockier still. Slower growth in China is unwelcome news for a global economy struggling to regain its footing after the disruptions of the Covid-19 pandemic. But over the next few years, China is likely to regain momentum — in part because of the hard work it is doing now.

The biggest immediate worry is the collapse of Evergrande. Like most Chinese property developers, it relies on two key funding sources: deposits paid by home buyers before construction and huge amounts of debt.

Evergrande’s woes result from a government campaign begun last year to force property developers to reduce their liabilities. It is the latest move in a five-year effort to bring the country’s debt under control. According to the Bank for International Settlements, China’s gross debt level, at 290 percent of G.D.P., has doubled since 2008. While that level is comparable with that of rich countries with well-developed financial systems, it is high for a middle-income country. China’s leaders know that to avoid a financial crisis or avoid a repeat of Japan’s stagnation of the 1990s — the aftermath of a big debt-fueled property bubble — growth in the future must be far less reliant on debt than it has been.

Aly Song/Reuters

The problem is that by attacking debt in the property sector, regulators risk shutting off a powerful engine that directly or indirectly affects as much as a quarter of China’s economic growth. Problems are spreading beyond Evergrande. Other developers are having trouble repaying their debts. And the sales and construction of new housing are both falling.

The drive to cut real estate debt will almost certainly depress China’s growth in the coming quarters. But it will not lead to a “Lehman moment,” when the implosion of a single heavily indebted company triggers a broader financial or economic collapse: The country has an enormous pool of savings. And the government is now adept at managing meltdowns of major companies, including the private conglomerates HNA and Anbang, Baoshang Bank and Huarong, a huge state-owned asset manager.

The larger question is whether China can maintain a dynamic economy when its government, under Mr. Xi, seems increasingly intent on meddling in the market. The answer: Despite a desire for more state discipline, China has not rejected markets — dynamism will continue.

Some of this state meddling is prudent. The property crackdown is part of a serious drive to cure the economy’s addiction to debt. Similarly, the power shortages that have plagued much of industrial China are due largely to efforts to slash the country’s reliance on coal. China has said that its carbon emissions should peak by 2030 and then decline, with a goal of reaching carbon neutrality by 2060.

One response to the energy shortage has been a long-overdue deregulation of electricity prices. This has allowed generators to pass on some of the impact of higher coal prices to end users. So it is not true that Mr. Xi’s government is implacably anti-market. Beijing, as it has for decades, will continue relying on a combination of state guidance and market forces: The state sets the direction for investment, with day-to-day outcomes dictated by the market.

A more serious concern is the yearlong offensive against privately owned big tech companies, notably e-commerce and the financial technology giant Alibaba, and the ride-hailing company Didi. It’s unclear whether China can ever become a true leader in innovation if it insists on squashing its most successful entrepreneurial businesses.

Yet even here, the story is not black-and-white. The internet crackdown is not really about crushing private enterprise: Private companies in many sectors, including tech hardware, are doing just fine. Rather, the crackdown addresses — in a very authoritarian way — the same anxieties about big tech that governments around the world are grappling with: unaccountable power, monopolistic practices, shoddy consumer protection and the tendency of a tech-heavy economy to drive income inequality.

One final worry is that these moves toward greater state discipline are driven not by economic motives but by Mr. Xi’s desire to reinforce his power, ahead of a Communist Party conference in late 2022 where he expects to gain a third term as the country’s leader. In the long run there is a risk that overly centralized power could degrade the government’s ability to manage the economy. But Mr. Xi also recognizes that his power will not be worth much unless the economy keeps growing.

China will never run its economy in a way that pleases free-market purists. But it has come up with a mixed model that works. And despite the stresses of the moment, it will keep on working.

Arthur Kroeber is a partner and the head of research at Gavekal Dragonomics, a China-focused economic research firm.

The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: letters@nytimes.com.

Follow The New York Times Opinion section on Facebook, Twitter (@NYTopinion) and Instagram.

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Britain’s Royal Mint to extract gold from discarded electronics

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Britain’s Royal Mint said on Wednesday it planned to build a plant in  Wales that could reclaim hundreds of kilograms of gold and other precious metals from electronic waste such as mobile phones and laptops.

Gold and silver are highly conductive and small quantities are embedded in circuit boards and other hardware, along with other precious metals.

Most of this material is never recovered, with discarded electronics often dumped in landfill or incinerated.

The more than 1,100-year old mint said it had partnered with a Canadian start-up called Excir which has developed chemical solutions to extract the metals from the circuit boards.

“It’s able to selectively pull out precious metals with a high degree of purity,” said Sean Millard, the mint’s chief growth officer.

He said the mint was currently using the process at small scale while designing a plant that “would look to process hundreds of tonnes of e-waste per annum, generating hundreds of kilograms of precious metals”.

The plant should be up and running “within the next couple of years”, he said, declining to say how much it would cost.

A kilogram of gold is worth around $55,000 at current prices.

 

(Reporting by Peter Hobson; Editing by Jan Harvey)

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