Harare - South Africa has come out at number 50 out of 112 countries on the 2018 global Financial Secrecy Index (FSI).
The FSI ranks jurisdictions according to their secrecy and the scale of their offshore financial activities.
It is used as a tool for understanding global financial secrecy, tax havens or secrecy jurisdictions, and illicit financial flows or capital flight.
South Africa received a secrecy score of 56.1%. The lowest score on the index is 31 (moderately secretive), while a score of 91 and above means a country will be exceptionally secretive. The secrecy scores are calculated based on 20 indicators.
South Africa’s secrecy score is, however, the lowest of the nine African jurisdictions included in the 2018 FSI.
“South Africa also accounts for less than 1% of the global market for offshore financial services, making it a small player compared with other secrecy jurisdictions.”
The FSI - 2018 Results report was launched on January 30. The report, which was compiled by the Tax Justice Network (TJN), said: “The country’s elite, and South African and foreign multinational companies within its borders exploit weaknesses in legislation and use other secrecy jurisdictions to reduce their tax obligations in a country with deep inequality.”
The TJN said: “The entanglement of business and state interests and the use of secrecy jurisdictions dates to Apartheid-era sanctions busting in which many countries were complicit.”
The TJN said South African companies which have an increasing footprint across sub-Saharan Africa are also complicit in draining the coffers of other African nations.
“Telecoms giant MTN – the largest cell phone company on the continent in terms of subscribers – has shifted billions of Rand, for example, from its subsidiaries in Ghana, Nigeria and Uganda through Mauritius."
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