A recent United Nations (UN) report about trade mis-invoincing in developing nations exposed that South Africa has lost over R2 Trillion to illicit financial flows.
The report indicated that SA between 2000 and 2014, lost more than R2 trillion in commodities trading.
The figure represents an average of R136 billion a year. And, is higher than the R25 billion estimate by Davis Tax Committee and SARS.
Also, the R2 trillion lost doesn’t include the loss recorded in other sectors.
An instance of illicit financial flows via trade mis-invoincing was illustrated in SA trade with India.
It was indicated that records show little gold trade in South Africa’s export data. But then, SA’s trading partners have a large amount of gold imports on records.
For instance, SA records show that India as a top trading partner, accounts for only 4% of its total gold export. On the other hand, India’s trade records indicated that 35% of its total gold imports came from SA.
Essentially, 31% of SA gold export to India were unaccounted for.
Illicit Financial Flows A Major Leakage In SA Fiscus
Reacting to these revelations, the Fighters (EFF) wailed that they once raised the scourge of illicit financial flows. It is a major leakage in our fiscus, and we raised the issue in Parliament, EFF remarked.
The party said: “(We) made presentation to the Davis Tax Committee. And, made South African Revenue Services (SARS) aware of cases were there is evidence of aggressive tax avoidance as part of illicit financial flows.
However, it was restrained significantly. (They made it) look as if South Africa government is responding to illicit financial flows adequately. It was evident when the EFF asked Mr. Zuma, on the 6th August 2015 in Parliament during question and answer session, about illicit financial flows that South Africa is failing drastically to grasp with the scourge.
Mr. Zuma initially gave a rambling non-answer. However, when pressed, he then responded and said, ‘government does not interfere with private sector business’.”
Thus, EFF called on the Minister of Finance, SARS and the South African Reserve Bank to declare illicit financial flows an immediate threat to SA’s economy.
“The report by the UN is a much-needed wake up call that South Africa. The EFF will remain at the forefront of defeating corruption… Our generational mandate requires strong, corrupt free government. (Such) that will run the commanding heights of the economy for the attainment of economic freedom in our lifetime,” EFF added.