Sars is soft on private sector – EFF

2014-07-03 08:32

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The SA Revenue Service (Sars) is failing to collect maximum revenue from the private sector, particularly from the mineral resources sector, the EFF has said.

The Economic Freedom Fighters said this after a Sars briefing to the portfolio committee on finance yesterday.

Party parliamentary chief whip Floyd Shivambu said Sars claimed easy victories concerning its record on revenue collection.

“We strongly believe that Sars is dismally failing to collect maximum revenue from the private sector,” said Shivambu.

“The overall contribution of the private sector into the national budget is less than 20% and this is despite the reality that South Africa boasts one of the biggest corporates in the African continent and the world in the financial and resources sectors.”

He said the tax contribution of all businesses in South Africa was less than R200 billion, meaning corporate tax could not afford to fund the entire education system of South Africa.

“The contribution of the mining sector in the national revenue is less than R25 billion despite the fact that South Africa is the richest country in the world in terms of mineral resources,” he said.

Shivambu said there were known instances of transfer pricing, base erosion and profit transfers in the corporate sector, but Sars was not doing anything about that.

He accused mining companies of creating subsidiary companies outside the country and selling their mineral resources to themselves at a cheaper rate. He said this was done to avoid tax in South Africa.

“This phenomenon is ongoing in South Africa and even the BEE players in the mining industry are involved in transfer pricing. The corporate sector is involved in massive tax evasion, which most possibly amounts to more than 25% of South Africa’s growth domestic product.”

Shivambu said the EFF would not praise Sars as it did not celebrate mediocrity. He said it would only applaud the revenue service if it could deal with base erosion, transfer pricing and profit transfer in a cogent and open way.

Party leader Julius Malema has been battling to settle his tax bill. He owes R16 million plus interest after failing to submit tax returns between 2006 and 2010.

In 2010, Sars contacted Malema about his failure to submit his tax returns. It took Malema 18 months, after many attempts by Sars, to file his outstanding returns.

Malema also failed to register his Ratanang Trust for tax purposes and Sars had to do this on his behalf. Sars attached a few of Malema’s properties to recoup the taxes he owed.

In May he reached an agreement with Sars and committed to remain compliant in future. He also accepted further assessments for the 2011 and 2012 tax years.

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