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We are committed to act with integrity in all matters
related to tax, including a policy of full transparency with
all tax authorities and the payment of all taxes properly
due under the law wherever we operate.
We strongly support global and local tax transparency
requirements and we are comfortable that our tax
governance framework is aligned to these requirements.
We are committed to:
g
g
Complying fully with all relevant regulatory obligations
in line with our broader social responsibilities and our
stakeholders’ expectations;
g
g
Acting with integrity in all tax matters in line with our
Tax Code of Conduct, disclosing all relevant facts to tax
authorities in all countries in which we operate under a
policy of full transparency based on open and honest
relationships with those authorities;
g
g
Pursuing clarity and predictability on all tax matters,
wherever feasible; and
g
g
Seeking to protect shareholder value in line with our
broader fiduciary duties.
We will not:
g
g
Seek to establish arrangements that are artificial in
nature, are not linked to genuine business
requirements and would not stand up to scrutiny by
the relevant tax authorities; and
g
g
Artificially transfer profits from one jurisdiction to
another to minimise tax payments; or pay more tax
than is properly due under a reasonable interpretation
of the law and upon receipt of a lawful demand.
The value we create through our
contribution to the economy
We are a major investor, taxpayer, employer and
purchaser of local goods and services, and contribute to
value creation in our countries of operation through
capital investment and the provision of income,
incentives and benefits to our employees.
In 2018, Vodacom’s external revenue
1
generated was
R86.7 billion, on which we made a profit before tax of
R22.1 billion
2
(excluding dividends). The Group’s tax
charge of R6.5 billion was 7% higher than the prior year
(2017: R6.1 billion), in line with growth in profit before tax
(if adjusted for the profit of associate from Safaricom).
The Group’s effective tax rate (ETR) decreased to 29.6% in
2018 from 31.7% in 2017. In the prior year, our ETR was
elevated by 1.4ppts in relation to a once-off capital
allowance adjustment, for the disposal of passive
network assets to Helios Towers in Tanzania. This year,
the ETR benefited from the inclusion of our share of the
after tax profits from Safaricom in the Group’s profit
before tax. When we compare our total corporate taxes
paid in actual cash terms, to our profit before tax, our
actual cash paid ETR was in line with the South African
statutory tax rate of 28%. We therefore paid R0.28 in
corporate tax for every R1 we generated in profit in our
countries of operation in 2018.
In cash terms we contributed more than R20.8 billion
to the public finances of governments on the African
continent, compared to R16.1 billion of cash passed to
governments in 2017, of which a significant number
relates specifically to the telecommunications industry.
The difference between the total contribution to public
finances of R20.8 billion (2017: R16.1 billion) and the tax
charge of R6.5 billion (2017: R6.1 billion) relates to a
multitude of taxes other than corporation tax and the
inclusion of 34.94% of Safaricom’s contributions to public
finances. 39.94% of Safaricom’s after tax profits is
included in the Group’s profit before tax. The year-on-year
increase in the total contribution to public finances is
primarily related to the increase in service revenue
and profits.
Total tax contributions made to governments
across our countries of operation
Country
Rm
Country
Rm
South Africa
11 207
Zambia
58
Kenya
4 507
Ghana
21
Tanzania
2 231
Mauritius
15
DRC
1 753
Cameroon
12
Mozambique
659
Ivory Coast
7
Lesotho
274
Angola
6
Nigeria
93
For further information, read our Public Finances report
2018 on
www.vodacom.comTax and our contribution to public finances
1. External revenue is the sum of revenues generated from transactions with independent parties (all transactions with the Vodacom and Vodafone Group
entities were excluded).
2. Profit before tax represents the total profit before tax in each country, excluding dividend income less expenses.
3. Excludes staff expenses of R821 million (2017: R742 million) capitalised against property, plant and equipment. Includes dividends of R44 million
(2017: R44 million) relating to the forfeitable share plan which was offset against the forfeitable share plan reserve.
Other value adding financial contributions
7 554
full-time
employees
direct investment in our people
R11.6
billion
investing in infrastructure
R5.6
billion
3
distributed to employees
in salaries and benefits
R121
million
investing in our communities
Cash contribution to public finances
R9.9
billion
direct tax contribution
R9.7
billion
indirect tax contribution
R1.2
billion
direct non-tax contribution
+
40
Vodacom Group Limited
Integrated report for the year ended 31 March 2018