Press release FITA 20 December 2018

Press release – FITA – for immediate release
FITA has been vindicated by two groundbreaking research papers on corporate tax avoidance in South Africa. These have found that the authorities have grossly underestimated the scale of unlawful profit shifting out of the country.

It conservatively amounts to R8bn a year in foregone taxes, and some of the largest multinationals are the biggest culprits.

FITA has been drawing the attention of the authorities to the practices of BEPS for some time now in the face of attacks on its members by multinationals in a campaign known as #takebackthetax. The question begs whether TISA and its multinational members will be equally demanding of authorities to “take back the tax” in respect of these profit shifting schemes.

The issue of profit shifting — when multinationals lower their global tax bill by shifting their earnings from affiliates in high-tax countries to those in low-tax countries — is particularly relevant for SA, given its fiscal squeeze, reliance on corporate tax receipts and growing exposure to foreign-owned firms.

Research estimates that the South African Revenue Service is being short-changed by about R7bn a year due to profit shifting. This is equal to about 4% of total current corporate income tax receipts, but it appears to be in line with that experienced in other countries.

FITA reiterates that the losses in revenue attributable to the tobacco sector cannot be limited to excise and VAT related schemes. FITA has always advanced for a more holistic approach by the SA Revenue Service which includes looking at base erosion practices used by multinationals.

FITA calls on the authorities to consider the most recent research papers released and to take heed of the warnings contained therein.

Issued by the Fair-trade Independent Tobacco Association: 20 December 2018

For queries kindly contact Monique Vogel t: 072 720 7919; e: Monique@fita.co.za

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