Sars: Large companies avoiding tax in SA

2012-05-08 15:26

Cape Town - South Africa has accused large multinational companies of using complex transactions to illegally reduce local tax payments, costing Africa's largest economy billions of rand.

"We have 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," Oupa Magashula, commissioner at the South African Revenue Service (Sars), told parliament's finance committee on Tuesday.

African countries are vulnerable to higher revenue loss through tax crimes because of a lack of knowledge on detecting and prosecuting sophisticated evasion tactics.

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

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

Sars has raised more than R5bn through audits and additional assessments on large corporations, but it was difficult to quantify the exact cost to government, a tax official said.

Sars has ratcheted up targeted interventions in high risk areas, including transfer pricing by large businesses, incomes of wealthy South Africans and the illicit cigarette industry.

South Africa has 12 million registered entities - including individuals, companies and trusts - and collected R743bn in taxes in the last financial year.

  • justin.pretorius - 2012-05-08 15:42

    Going after companies when it is getting tight now? Maybe the regime should concentrate on spending the money they have more effectively than hunting for more money that is just going to be wasted on sleazy tenderpreneurs.

  • Hanno Van Helsdingen - 2012-05-08 15:54

    SARS is avoiding my VAT return! 4 months now!

      Michael - 2012-05-08 16:38

      They're not avoiding it, they're just rampantly incompetent. Unless your VAT return is 800billion, they have no reason to keep your money, it's not even pocket change to them. Fight it, push, push push. You'll get your money, keep it up.

  • wo0two0t - 2012-05-08 15:55

    That's a good thing... at least they can put the money to better use than our government.

      Tamaranui - 2012-05-08 18:36

      Ridiculous statement above,

      Barend Psywalker Wasserman - 2012-05-08 22:42

      Tamaranui, of course you would say that. You would rather see Malema pocket the cash than see the money going to proper usage.

  • Nicholas - 2012-05-08 16:22

    Can you honestly blame them? They see billions of their rands going down the tubes on a daily basis. Week after week we read about scandal after scandal. Nobody is ever held to account, money is never recovered and nobody in government seems to give a rats backside. Its like children stealing and playing with other peoples sweeties. On top of all this, big business have to put up with being insulted and threatened because they are governments' public enemy no.1. The minute they see their taxes being used properly and they start getting some value back, who knows, maybe the situation will change.

  • Michael - 2012-05-08 16:30

    BE HAPPY THAT SARS IS FINALLY AFTER BIG BUSINESS! These are companies that colluded to push up bread prices and rape the poor for extra profit. Us normal folk can't afford to pay consultants to help us dodge tax. Big business in SA can. We should appreciate that SARS is starting to track down corporate tax offenders. Before we become like the USA: GE made $81 billion the past decade, even tho corporate tax rate is 35%, GE paid just 2.3%. DuPont - 17% Verizon (USA version of Vodacom) hasn't paid ANY taxes for 3 years. Google - 2.4% Some US firms have got it so fine-tuned THAT THEY MAKE A PROFIT! i.e. they DONT PAY TAX, THEY RECEIVE TAX BREAKS and make even more money. If SARS successfully taxes big business, our taxes would drop significantly. Go for it SARS, if we have to cough up our hard earned money, then the corporate FCKERS driving Aston Martins, Mercedes Gull-Wings, Ferraris and Bentleys can also pay tax. 80% of the wealth is in the pockets of about 1% of South Africans. They must pay too.

      Michael - 2012-05-08 16:40

      a question to the 2 thumbs-downers: don't you want to pay less tax? or are you fat bankers sitting doing nothing right now?

      Hugh - 2012-05-08 17:32

      @ michael really you need to grow up and smell the Roses. The consumers are at fault not governmnent and definatly not business. The SA consumer happily pays the price without grumbling. Pay attention to the world around you and you will see that people pay high prices for clothing worth cents an indication that there is money to be absorbed. If the consumer says no to high prices and does not buy that unnecessay bit of clothing, that over priced data package, cook in a bag condoment or prepared gravy the comapny eventually gets the message and reduces prices. It is up to you. No good blaming others for taking advantage of your stupidity. You do not like the price do not buy it.

      Tamaranui - 2012-05-08 18:40

      Hugh speaks for himself, Anyone that condones Big Corporates stealing funds from RSA via Tax evasion has no value. So the hate for the Government is greater than the betterment of RSA via greater tax return..............This is the RSA today. When will People ever learn????

      Kevin - 2012-05-08 18:41

      Where are the South African examples? Who cares what happens in the US. The reason why large corporates can minimise their taxes is because they make use of a more and more convoluted tax act. South Africa's current tax act is The Income Tax Act 1962 as amended. It is time to simplify the tax act reduce the cost of compliance and possibly introduce a "Tobin" tax.

      Tamaranui - 2012-05-08 18:43

      Hugh speaks for himself, I lived in Auckland for 13 years and I assure you life is much easier in Auckland. Families actually can make the choice to be a one Partner working family. This is great. In the two years since I have returned to RSA the public here is under much more financial strain, Everyone's living on credit. Anyone that condones Big Corporates stealing funds from RSA via Tax evasion has no value. So the hate for the Government is greater than the betterment of RSA via greater tax return..............This is the RSA today. When will People ever learn????

  • Dooie - 2012-05-08 17:51

    And Malema seems to be the biggest company.

  • braamc - 2012-05-08 18:14

    Start stealing less tax money, the pit is drying up cANCer thieves!

  • Lauden Kirk - 2012-05-09 09:51

    First world tax in a third world environment. I wonder who is causing crime. SARS ???

  • Mandy Casey - 2012-05-10 23:09

    Nail them, everyone must pay tax. Simple.

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