Multinationals costs the Southern Africa economy $530-billion

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The issue of aggressive “tax management” by global and South African firms are is receiving increasing attention from policy makers, lobby groups and the media.

This is accroding to assurance, tax and advisory firm Grant Thornton in an article on its website.

It says that according to Global Financial Integrity, a non-profit, research and advocacy organisation, an estimated $530-billion has been lost to sub-Saharan African country’s tax coffers between 2003-2012 due to tax avoidance and illegal activity.

The article refers to the recent Africa Tax Administration Forum (Ataf) conference on base erosion and profit shifting (BEPS) held in in Sandton where Finance Minister Nene reiterated the need to protect South Africa’s already small tax base.

“He specifically highlighted practices such as incorrect trade invoicing that must be addressed to prevent tax losses to African countries like ours that rely on tax from multinational corporations.”

Non-profit lobby group the Alternative Information & Development Centre (AIDC) recently told the Davis Tax Committee that shifting profits to low-tax jurisdictions not only erodes South Africa’s tax base, it erodes the base for paying living wages to employees – as well as the base for creating value for black economic empowerment partners.

Read the article here.