Tax evasion a crime against SA – Ramaphosa

Cape Town – Tax evasion is not only a crime against the state, it is also a crime against the people of South Africa, says Deputy President Cyril Ramaphosa.

Ramaphosa has now called on South Africans who are aware of tax evasion by individuals or companies to report them to the authorities.

He was responding to the EFF’s Leigh-Ann Mathys in the National Council of Provinces on Wednesday on what the country was doing with regard to tax and profit shifting, mainly by mining companies, and whether the country would set up a commission to look into this.

Ramaphosa said the issue of tax evasion “clearly is a very important one” in South Africa. “It should be important for all citizens in South Africa. Tax evasion and the illegal transfer of capital across borders are dealt with by relevant authorities in our country.”

He said the SA Revenue Service and the SA Reserve Bank continuously assessed taxpayers and also assessed significant financial transactions “where they believe that such activities are not declared or not legitimate”.

“I think we are on record as government that tax evasion is not only a crime against the state it’s also a crime against the people of our country, ordinary people. It is a practice we would like to discourage; to root out of our body politic so that people do not avoid paying tax. And to the extent that anyone, be it an individual or a company, should be pursued.

“If anyone of us knows people or companies that are evading taxes, that should be reported to the authorities and they should take action,” said Ramaphosa.

He said the most significant form of tax evasion was often done through so-called base erosion profit shifting.

“(This) describes tax-planning strategies that rely on mismatches and gaps that exist between tax rules and different jurisdictions. These strategies are designed to minimise the corporation tax that is payable, either making tax profits to disappear or shifting profits,” said Ramaphosa.

He added that in most cases, the various strategies were not illegal.

“This essentially is a global problem,” said Ramaphosa.

Mathys said she was expecting a more pointed response from Ramaphosa because estimation of tax evasion was in the billions, particularly from the mining sector.

DA MP Cathy Labuschagne asked Ramaphosa what the ministerial advisory council on energy’s stance was regarding the privatisation of the energy sector in South Africa and the private sector’s role in resolving the energy crisis.

Ramaphosa said the Department of Energy had advised him that the council had not yet been established and that a list of 180 nominations for the council were still being processed. Once appointed, the names of council members would be made public, he said.

“The private sector has a significant role to play in resolving our energy shortfall by participating in programmes that seek to boost our electricity-generating capacity. The private sector is therefore expected to augment Eskom’s build programme through the independent power producer programme, in terms of which generation capacity will be constructed on a build, operate and transfer basis,” he added.

The Department of Energy had committed to about 4 000 megawatts of renewable energy generation through private sector funding, he said.