Leader of South Africa's ruling African National Congress party, president Jacob Zuma arrives to address the party’s final pre-election rally in Johannesburg. Cornell Tukiri / EPA
Leader of South Africa's ruling African National Congress party, president Jacob Zuma arrives to address the party’s final pre-election rally in Johannesburg. Cornell Tukiri / EPA
Leader of South Africa's ruling African National Congress party, president Jacob Zuma arrives to address the party’s final pre-election rally in Johannesburg. Cornell Tukiri / EPA
Leader of South Africa's ruling African National Congress party, president Jacob Zuma arrives to address the party’s final pre-election rally in Johannesburg. Cornell Tukiri / EPA

South African democracy faces one of its most critical tests


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Twenty-two years since the end of apartheid rule, many black South African are worse off than before the country became a democracy. As they say in Johannesburg, you can’t eat the vote.

For too long the international community thought of South Africa as the great rainbow nation whose success in creating a functioning democracy after years of segregated rule could be a beacon for a globalised, multicultural world. South Africa is the glue that holds together much of the sub-Sahara region and has one of the strongest economies on the African continent.

The current economic situation, however, highlights many of the problems with the country’s continuing transition from apartheid to democracy. South Africa today is a pressure cooker full of barely contained anger that could quickly turn into civil strife.

Thirteen politicians from the ruling African National Congress (ANC) party have been murdered in the run-up to nationwide municipal elections taking place today.

From one perspective, the murders are a clear indication of widespread desperation.

And it is easy to understand where the desperation originates. Black university graduates can only get jobs as petrol pump attendants and black teachers receive half the pay of their white counterparts. Some call this type of inequality “economic apartheid”.

White business owners and investors that prospered under the apartheid government have made large sums of money in the past 20 years of democracy as South Africa privatised many parts of the economy. These businesspeople, including some members of the black community, want to keep the status quo. There is a slowly growing black middle class in South Africa, but their wage growth lags behind their white counterparts in many sectors.

Many South Africans blame president Jacob Zuma’s ANC for the country’s woes. Not for a lack of vision, but for an inability to fulfil the promise of black economic empowerment and for encouraging a system of political patronage that has left the government rife with corruption. Fears of national unrest are now so severe that the state broadcaster, SABC, has banned footage of government buildings under attack during protests.

South African infrastructure is also in a pitiful state after years of gross neglect. During the hot summer months, the country regularly faces rolling black outs thanks to the ageing electricity infrastructure.

International investors have watched the country’s credit status hover a notch above junk and the South African rand has been on a roller coaster ride along with other emerging currencies.

Meanwhile, South African elites have stashed billions of dollars in offshore bank accounts as they try to maintain the delicate status quo. Many analysts are warning that the country will self-destruct if they don’t deal with the economic problems.

The country is full of other imbalances. Eighty per cent of health-care costs, including private care, is spent on 20 per cent of the population. Just 3 per cent of shares on the Johannesburg Stock Exchange is owned by non-whites and, while it remains an estimated figure, around 80 per cent of farmland is still in white hands. As are all four big banks and major mines. South Africans have worked for three centuries under white rule and have just had 22 of those years with the vote. They have some ideas that have worked before.

The old hands of the ANC suggest sitting down and talking. After apartheid ended, the truth and reconciliation process helped heal the nation through constructive dialogue. It has happened before and it can happen again.

The Democratic Alliance (DA), which was born out of the ruling National Party from the apartheid years, now has a black leader and many black candidates. If the DA is successful at the polls today it could provide the necessary shock needed to jolt the ANC into starting serious and substantial negotiations with the white elite. Similarly, the Economic Freedom Fighters, who have called for large-scale nationalisation similar to that in Zimbabwe, are looking to make inroads into the ANC heartland of Johannesburg from their political strongholds in the north of the country.

If the election is disastrous for the ANC, it could precipitate a rapid end to Mr Zuma’s controversial presidency. He could be replaced by someone who decides that “talking left and walking left” is the only way ahead.

That is: to nationalise the mines and seize back the land is the start of winning back the black vote. The consequences of those actions are unknown, but will not be without risk of economic disaster.

Thomas Harding is the former defence correspondent for The Daily Telegraph

Company profile

Date started: December 24, 2018

Founders: Omer Gurel, chief executive and co-founder and Edebali Sener, co-founder and chief technology officer

Based: Dubai Media City

Number of employees: 42 (34 in Dubai and a tech team of eight in Ankara, Turkey)

Sector: ConsumerTech and FinTech

Cashflow: Almost $1 million a year

Funding: Series A funding of $2.5m with Series B plans for May 2020

Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

Company Profile
Company name: OneOrder

Started: October 2021

Founders: Tamer Amer and Karim Maurice

Based: Cairo, Egypt

Industry: technology, logistics

Investors: A15 and self-funded 

Specs

Engine: 51.5kW electric motor

Range: 400km

Power: 134bhp

Torque: 175Nm

Price: From Dh98,800

Available: Now

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Bharat

Director: Ali Abbas Zafar

Starring: Salman Khan, Katrina Kaif, Sunil Grover

Rating: 2.5 out of 5 stars