Money Matters  

Tax evasion costs South Africa 'billions'

South African Revenue Service says that large multinationals are using illegal tax reducing measures
 Tax evasion costs SA 'billions'
 
 

Some of South Africa’s largest multinational companies are costing the economy billions of rand through illegal tax dodging, according to the South African Revenue Service (SARS).

Commissioner Oupa Magashula told the parliament's finance committee that it had “detected an increase in the use of cross-border structuring and transfer pricing manipulations by businesses to unfairly and illegally reduce their local tax liabilities."

Evading tax in African countries has been widespread due to nations failing to pick up on tactics used by businesses to pay less tax.

 

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Bob Head, a chartered accountant and special advisor to Magashula, commented: "A company will always try and actually maximize its after-tax profit... and a one or two percent movement one way or the other could have a decisive impact on profits."

"There are some people in the business of trying to help companies not pay tax and they will keep on inventing new schemes," Head added.

Although the exact cost to government was hard to calculate, SARS said it has raised around R5 billion through audits and extra assessments.

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