‘SA is bleeding billions’
05 November 2015
Posted by: Author: Ingé Lamprecht
Author: Ingé Lamprecht (Moneyweb)
Due to tax base erosion and profit shifting – SARS official.
South African has lost R250 billion in the form of service payments over a three-year period, highlighting the significant risk base erosion and profit shifting (BEPS) is posing to the country’s tax base, a South African Revenue Service (Sars) official has said.
Almost R80 billion of this were management fees.
Speaking at a panel discussion hosted by Deloitte Africa, Sunita Manik, group executive at the Large Business Centre at Sars, said the erosion of the tax base creates a false perception that there is very little business activity in South Africa. The reality however is that a lot of value is being created – it might just not be visible.
According to the Organisation for Economic Co-operation and Development (OECD), which published a comprehensive BEPS action package report in October, BEPS "refers to tax planning strategies that exploit gaps and mismatches in tax rules to make profits ‘disappear’ for tax purposes or to shift profits to locations where there is little or no real activity but the taxes are low, resulting in little or no overall corporate tax being paid”.
In an environment where there is constant pressure on government to improve service delivery and to build infrastructure, the erosion of the tax base is a significant concern, especially since economic growth has been under pressure and government is trying to balance its books while also keeping ratings agencies at bay.
Manik said the estimates of national expenditure in the Medium-Term Budget Policy Statement (MTBPS) show that in most government departments salaries represent the biggest chunk of the money spent.
Please click here to view full article.
This article first appeared on moneyweb.co.za.