19 November 2018

Africa: Trade Misinvoicing Costs South Africa U.S.$7.4 Billion in Tax a Year

analysis

While SARS is scrambling to meet collection targets, a new report estimates the country lost $37-billion in revenue to trade misinvoicing in five years. Trade misinvoicing is thought to be the largest component of illicit financial flows, draining developing countries of much-needed finances.

In a new report, Global Financial Integrity (GFI) estimates South Africa lost $37-billion - $7.4-billion a year - in potential government revenue due to trade misinvoicing between 2010 and 2014, denying the state resources to meet its developmental goals.

GFI has called illicit financial flows (IFFs) the most damaging economic condition facing developing countries. The Washington-based non-profit specialising in IFFs says trade misinvoicing accounts for the majority of IFFs.

It involves companies moving money illicitly across borders by misrepresenting the value of a transaction and the report, titled South Africa: Potential Revenue Losses Associated with Trade Misinvoicing, provides an estimate of the total value misrepresented and calculates the tax lost.

"The practice of trade misinvoicing has become normalised in many categories of international trade," reads the report.

"GFI's very conservatively estimated $37-billion in lost revenues over the last...

South Africa

He Called Me the K-Word, Made Fun of My Size - Controversial Pastor Mboro

Incredible Happenings Ministries leader Prophet Paseka "Mboro" Motsoeneng was allegedly racially abused by a white… Read more »

See What Everyone is Watching

Copyright © 2018 Daily Maverick. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.