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17 July 2015 – SARS convenes cross-border forum on illicit financial flows

17 July 2015 – SARS convenes cross-border forum on illicit financial flows

Pretoria, 17 July 2015 – The South African Revenue Services (SARS) has convened a forum of commissioners from bordering countries, including Swaziland, Lesotho, Zambia, Botswana, Namibia and South Africa to deliberate on core tax and customs issues, and focus areas linked to illicit financial flows, base erosion and profit sharing, transfer pricing and cross-border enforcement, to chart a road map and maximise the respective participating countries’ statutory mandates of revenue collection.
Recently the IMF released a working paper, saying that the ‘the cost of multi-national companies deliberately avoiding tax exceeds $200 billion per year’, while the Organisation for Economic Capacity and Development (OECD) stated that developing countries lose three times more to tax havens than what is received in international aid per year.  The Global Financial Integrity Report furthermore provides that ‘outright tax dodging is an even bigger problem, with undeclared money transfers, false invoices and the like, costing developing countries more than $990 billion in 2012’. The African Union report on illicit financial flows adds that $60 billion is annually tapped from the continent.
Furthermore, the G20 / OECD announced a two-year project on base erosion and profit shifting to change existing international tax standards with the aim of ensuring that profits are taxed where economic activities occur and where value is created.
It is against the above backdrop of abusive tax practices, that SARS convened the forum, with Commissioner, Mr Tom Moyane, calling for ‘collective cross-border strategies to respond to the challenges, which can lead to a continental discussion under the African Tax and Administration Forum (ATAF)’.
In his opening remarks, SARS Commissioner, Tom Moyane, provided context to the meeting, saying, “Exports out of developing countries are often under-invoiced so that income is accrued abroad, and imports into developing countries are often under-invoiced, so that the excess payment accumulates in foreign accounts.”
Mr Moyane acknowledged the increase in automatic exchange of tax information and posed the question on how this can be leveraged.
The deliberations of the forum culminated in a joint statement of in-principle agreements and actions, attached here to this media release.
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