An investigative report compiled by the journalist consortium 100 Reporters makes the claim that the government of South Africa is earning a pitifully low amount in taxes from the diamond companies that are operating in the country. According to the report, entitled "Rough and Polished: South Africa Shortchanged on Diamond Trade", $1.73 billion worth of rough diamonds were mined in the country in 2011, yet a mere $11 million in mining royalties were paid to Pretoria in 2010 and 2011.
This sums amounts to a de facto tax rate of less than 1%, far less than that of other Africa nations, according to 100 Reporters. The low tax rate in South Africa is partly due to a measure which permits firms to lower or even eliminate export taxes on rough stones if the firms offer the state first dibs on the diamonds. In practice, the government often declines these offers to purchase the gems, since they are very expensive.
This article first appeared on israelidiamond.co.il.
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