Association warns against cancelling Prasa contracts
Prasa has spent R2,5-billion refurbishing trains - yet many of those trains remain unused or discarded.
Now, as the agency considers cancelling the contracts, legal experts are warning of the potential legal and financial consequences.
Mesela Nhlapo, CEO of the African Rail Industry Association, says she fears the devastating impact on the rail sector and the economy.
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The Star
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- The Star
The real price of not filing your tax return in South Africa
Mthobisi Nozulela | Published 8 hours ago The 2025 tax season is in full swing, but many South Africans are still not filing their returns, unaware that this could lead to mounting penalties and legal trouble. The tax season officially began on Monday, July 7 2025, with the South African Revenue Service (SARS) setting deadlines for different categories of taxpayers. According to the revenue collector, individual taxpayers must file their returns by October 20, 2025. Provisional taxpayers, meanwhile, have until January 19, 2026 to submit. "Taxpayers who do not receive notifications from SARS that they are automatically assessed are encouraged to submit their tax returns in a timely and accurate manner from July 21, 2025," SARS said. Failing to file, even when no tax is owed, can lead administrative penalties of up to R250 to R16,000 per month for each return outstanding. "In more severe cases, persistent non-compliance may result in criminal charges, including prosecution for tax evasion. Importantly, SARS uses advanced data-matching systems and international reporting standards to detect undeclared income, so assuming you're not "under the Radar" is a risky gamble," Tax Consulting South Africa said. Tax Consulting South Africa, a firm specialising in South African and international tax law, as well as SARS compliance. "Even if no tax is owed, filing your tax return ensures your tax affairs are in order and protects you from retrospective assessments or penalties. In a country where tax compliance is both a legal requirement and a civic duty, many South Africans still believe that if they don't owe anything, they don't need to file a tax return. "Unfortunately, that assumption could have costly financial and legal consequences. Whether due to oversight, uncertainty, or misinformation, failing to submit your annual return — even when you think there's no tax due — is a risk that can escalate over time. Tax Consulting South Africa also advised those who have not filed for several years to first check which past tax years they were supposed to file for. To fix this, they recommend that taxpayers can work with a tax practitioner to gather all relevant documents and submit the outstanding returns as soon as possible. "To avoid any further incurrence of penalties, it would be advisable to stay vigilant of any notices shared by the commissioner requiring returns for assessments of a normal tax return, within the period prescribed in that notice, per section 66 of the Income Tax Act. As such, ensure that you file your tax returns as and when they become due or on or before the prescribed deadline" IOL News [email protected] Get your news on the go, click here to join the IOL News WhatsApp channel.
Daily Maverick
2 hours ago
- Daily Maverick
Trump tariffs threaten thousands of Eastern Cape manufacturing jobs — but mitigating action can be taken
The announcement by US President Donald Trump that South African goods will be subject to 30% import tariffs from 1 August is the latest addition to the clamour of alarm bells about the viability of manufacturing in the Eastern Cape, potentially putting thousands of jobs on the line. The reality is that a number of countries will now have significant cost advantages over South Africa, including countries on this continent, while other countries have the flexibility to absorb the tariffs. In addition, this will strengthen countries with lower tariffs that we did not compete with in the past. And if imports from South Africa are replaced with products made by new US manufacturers, there will be an oversupply of these products in the global marketplace. Analysis by the Nelson Mandela Bay (NMB) Business Chamber indicates that thousands of direct and indirect jobs in manufacturing in the Eastern Cape are at risk from the impacts of the new US tariffs. This is in terms of reduced competitiveness and economies of scale of SA manufacturing against more favourable locations worldwide, as well as the knock-on effects on other trading relationships and the responses of other countries in an escalating global tariff war. Such job losses will have a vast socioeconomic impact, given that each employed breadwinner supports an estimated 10 other people in extended families and communities. Alarm bells over the loss of manufacturing capacity and employment in NMB have been ringing for some time, as evidenced by the downsizing of operations and outright plant closures. This has been particularly evident in the tyre industry, where over the past few years we have seen Bridgestone and ContiTech closing factories, while Goodyear is restructuring its operations, which may result in the closure of its plant in Kariega. Over recent years, we have also seen the restructuring and, in some instances, the closures of catalytic converter and seat manufacturing companies. Automotive sector faces crisis On the vehicle manufacturing side, General Motors left South Africa at the end of 2016, resulting in the Chevrolet brand leaving the market and job losses at the company, suppliers and dealers. Alongside this, vital community support initiatives in the education and housing areas disappeared. Mercedes-Benz, which exports vehicles to the US, has suspended production at its operations for six weeks until the end of this month. This follows a restructuring last year that saw the plant shed 700 jobs. The NMB Business Chamber's Enabling Environment Barometer indicates that more direct and indirect jobs are at risk, while several manufacturers have imposed hiring freezes. Deindustrialisation is not in itself the issue. The shift from heavy industry and manufacturing to the services sector and high-tech, innovation-oriented businesses is a natural progression in advanced, maturing economies, especially where services are exported, which is not necessarily the case in South Africa. The country is in line with global trends in developed economies of a declining contribution of manufacturing to GDP and employment. However, in our developing economy with rising unacceptably high levels of unemployment (the Eastern Cape has the second-highest unemployment rate in SA, which recently rose by 2.7 percentage points to 39.3%), this is not a sign of positive economic progress; it is a trend that urgently needs to be reversed. Deindustrialisation in South Africa stems from a weakening economy characterised by increasing costs of production and doing business, inefficiencies in logistics and infrastructure, and a lack of basic service delivery. The enabling policy environment is also lagging in incentives to support local manufacturing in general, and particularly the shift to new energy vehicle technologies and e-mobility solutions, all of which are exacerbated by the US tariffs and their knock-on effects. Multinationals can move production between facilities around the globe, which gives them the most competitive base from which to operate. This becomes a barometer — the greater the number of multinationals closing or downsizing, the bigger the systemic problems in a region. Why Nelson Mandela Bay and the Eastern Cape can't afford to fail The economy of Nelson Mandela Bay and the Eastern Cape is in a vulnerable position, as the region remains centred on manufacturing, with the automotive sector the foundation of deep value chains and a surrounding ecosystem of component manufacturing, logistics providers and suppliers of indirect goods and services. The strength of the automotive sector and its investment in innovation and technology, and the skills associated with it, bring immense value to the area. Alongside this, manufacturing in other sectors, such as beverages, pharmaceuticals and agro-processing, has emerged in NMB. Given the economic knock-on impact of manufacturing, the sector's contribution to the Nelson Mandela Bay economy is probably far greater than its direct contribution of 25%. Similarly, the approximately 64,000 jobs in the metro directly linked to the automotive sector, representing more than 40% of auto manufacturing employment in South Africa, have an estimated multiplier effect of four additional jobs in direct supply chains and sectors such as retail, tourism and property. The SA automotive industry is highly export-oriented, with almost two-thirds of local vehicle production destined for export markets and more than 50% of that emanating from Eastern Cape manufacturers. South African manufacturers need to retain these levels of exports to maintain the economies of scale that enable competitiveness, which in turn supports local vehicle manufacturing and employment. However, manufacturers that do completely knocked down (CKD) vehicle manufacturing, where the entire vehicle is assembled from imported or locally made parts, are losing ground to the rapid rise of cheap fully assembled vehicles and the semi-knocked-down (SKD) assembly of vehicles that are imported partly assembled. Sales of locally built vehicles have declined from 46% of domestic vehicle sales in 2018 to 37% last year, and five of the 10 top-selling passenger cars in the local market are now from brands that do not do CKD assembly in South Africa. Due to its deep value chains and interconnectedness with component manufacturers, and the surrounding network of local suppliers of goods and services, as well as the ripple effect into other sectors, CKD manufacturing supports far greater levels of investment, employment and localisation of manufacturing than does SKD assembly. Policy reform While addressing the issues of ineffective service delivery, crumbling infrastructure, logistics bottlenecks and safety and security are critical to ensuring an enabling environment for business, the other key to reversing deindustrialisation lies in reforming the policy landscape. Attempting to protect local manufacturing through retaliatory tariffs is not the solution, as this is likely to result in further rounds of counter-tariffs and impacts on South Africa's trade relationships with the US and other countries — an unproductive approach with few likely positive outcomes. Rather than using tariffs to eliminate external competition, South Africa needs to be looking at how to support and strengthen local manufacturing through incentives that encourage investment in CKD over SKD manufacturing, localisation of components, and give local operations a competitive advantage over other locations within a multinational brand. Moreover, we need to reduce complexity and make it as easy as possible to retain and attract investment to our country. Incentives should be structured to attract and encourage new investment without imposing massive bureaucratic challenges. Alongside efforts to improve SA's trade offer to the US, we need to explore and strengthen other trading partnerships, particularly with BRICS countries, the European Union and Southeast Asia, to diversify our markets. We should be driving towards finalising the rules of origin for vehicles to activate the potential under the African Continental Free Trade Area agreement. Exports to BRICS markets currently generally comprise unbeneficiated raw materials and agricultural products. SA's exports to the European Union and the US represent greater diversity and integration, and more opportunities for job creation that are backed and supported by trade agreements. SA needs to be a source of high-margin value-added products and beneficiated minerals, not a source of low-margin minerals. We must do everything possible to retain and strengthen our manufacturing capabilities so that we can create and unlock downstream employment opportunities. Manufacturing is the bedrock of the Nelson Mandela Bay and Eastern Cape economy. The economic future of this region depends on strategic action to ensure that we offer a competitive value proposition for manufacturing, in terms of the basic enabling environment and forward-thinking policy. Our business community wants this to happen and is not simply whining about the issues; rather, we will continue to roll up our sleeves to take action and be part of the solution to retain investment and employment in NMB. The chamber remains positive that we can realise the potential of the Bay of Opportunity as a diversified manufacturing and export hub for Africa, if we start now. This requires a multi-stakeholder response centred on speed and taking action. DM
Daily Maverick
2 hours ago
- Daily Maverick
The Finance Ghost: Much ado about MAS — Rare case of two-headed shareholder activism
How did JSE-listed Eastern European property fund MAS land itself in the middle of a battle that includes at least two distinct groups of shareholders? If you crave a boring life, then putting your name down to be a non-executive director at MAS probably wouldn't be wise. The JSE-listed Eastern European property fund finds itself in the middle of a battle that includes at least two distinct groups of shareholders. What makes this particularly interesting is that we aren't even seeing those groups fighting with each other. Instead, this can best be described as two-headed shareholder activism, with both of those groupings fighting with the board directly – at least for the time being. If that sounds rather frightening, that's because it is. To help the company navigate this mess, the board of MAS has appointed Investec as its corporate adviser. The official line is that the board wants to appoint an adviser to help it with any future offers that might come through for the company, but personally I think it's more a case of just wanting to get experienced advisers in the room as quickly as possible. But how did we get to this point? Gradually, then suddenly The seeds for this mess were planted a couple of years ago in 2023, when MAS suspended its dividend based on a concern about having enough cash available for bond maturities in years to come. If every property fund behaved this way, then none of them would ever pay a dividend, as the assumption is always that debt will continue to be available at reasonable rates for these companies. The MAS narrative was that because of its credit rating and the prevailing environment, it might not be possible to refinance the bonds at sufficiently low rates. As time went on, MAS regained the trust of institutional investors, who backed this story and took a view on underlying net asset value growth rather than the yield (or lack thereof). By the end of 2024, the share price had recovered fully from the drawdown of roughly 35% in late 2023, generating great returns for punters along the way. The volatility in 2025 has been staggering, with the stock dropping from R23.50 at the start of the year to below R17.00 in the April flash crash. It's now back to where it started the year. Again, those who timed their buys correctly have done incredibly well here. But those who bought in just before the September 2023 crash have essentially made nothing. Prime Kapital is frustrated by this situation, as it sees the MAS shares as being undervalued. When shares are trading at a discount to the value of the underlying assets, the voices calling for a disposal of assets and return of capital to shareholders become louder. And thanks to the terms of the joint venture agreement, Prime Kapital has the bite to match the bark. Therein lies the reason why the second grouping of shareholders has formed: MAS has broken the trust of the South African institutional investor community once more. And this time, I suspect that it's terminal. Boiling point You see, with Prime Kapital taking an aggressive approach of using the cash in the joint venture between the companies as a bargaining tool in an effort to get the MAS board to agree to a value unlock strategy (a sale of properties and return of capital to shareholders), local institutional investors were left scratching their heads about the terms of that joint venture. MAS needed to respond to this by releasing a summary of the terms of the joint venture with Prime Kapital. Unfortunately, this summary quickly led to far more questions than answers – and many of those questions have teeth. A group of institutional investors in South Africa have come together for the purposes of trying to get answers. They've demanded a shareholder meeting to appoint four new non-executive directors to the board, including property industry stalwart Des de Beer. They've also sent a very angry letter with serious allegations about disclosure shortcomings related to the joint venture agreement. I must be honest: I don't blame them at all. I was amazed that Prime Kapital had the ability to block the cash being paid out of the joint venture, and that's not even the worst of it. If the allegations are correct, then it appears as though key economic elements of the joint venture agreement weren't disclosed properly to the market. And amid all this noise, the shareholder meeting that was called by Prime Kapital to give an advisory vote to the board regarding the proposed asset disposal strategy and special dividends didn't exactly go the way they had hoped. If you include the votes by Prime Kapital, it's approximately a 50–50 split. But if you exclude those votes, thereby isolating the rest of the shareholders, you find that holders of 89% of shares voted against the resolutions. So, where does this leave us? MAS will need to have a shareholders meeting to deal with the proposed appointment of non-executive directors, as well as the potential removal of two directors whom the institutional investors feel are conflicted or could reasonably be perceived to be conflicted. Prime Kapital will need to tread carefully here, as its approach of wanting to be seen as driving a value unlock strategy (rather than just focusing on its own interests) is already being viewed with much scepticism by most other investors, so a move to block reasonable non-executive director appointments won't win it any friends. Remember, it has already hinted at the terms of a cheeky offer to shareholders and now there are concerns around disclosure as well, so the perception of its approach isn't exactly positive at the moment. To add further spice to this utterly delightful corporate finance conundrum, we have Hyprop waiting in the wings with a potential offer for MAS. This is after Hyprop shareholders were happy to support a capital raise that gives Hyprop the firepower to put a number on the table. There are many moving parts here and there are big numbers on the line. In this blend of high-stakes poker and chess, the advisers really make a difference. We aren't even close to seeing the end of this story just yet. DM
