Study: SA urgently needs to tackle illicit financial flows
As the South African Revenue Service (Sars) boss vows tougher action on illicit financial flows, a new report claims South Africa urgently needs to take decisive steps.
Sars boss Tom Moyane last week announced new plans are being formulated to tackle illicit financial flows, estimated to rob the fiscus of billions every year.
A day earlier, the Tax Justice Network (TJN) released its latest financial secrecy index, reiterating concerns over South Africa's shortcomings when it comes to holding companies accountable.
The network estimates between R250-to R380 trillion of private wealth is located in secrecy jurisdictions across the globe.
And while small, little known states - the British Virgin Islands or Panama - are sometimes considered notorious tax havens, this report suggests otherwise.
The Financial Secrecy Index 2018 lists Switzerland and the USA as the least financially transparent countries of all those surveyed.
South Africa ranked 50th on the list based on financial transparency.
The United Arab Emirates, specifically Dubai - where the Guptas and their associate, the state president's son Duduzane Zuma, are tax residents - has been ranked as even more secretive - although its contribution to the global economy is less significant.
A range of law enforcement agencies, apart from Sars, have publicly confirmed investigations into the family's alleged involvement in state capture.
While South Africa has sufficient laws to combat money laundering and terrorism financing, the report states legislative shortcomings obstruct the fight against other forms of illicit financial flows, including fraudulent trade invoicing.
"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 study reads.
Companies and individuals named, include MTN, Spar, SAB Miller - some of which were named in the so-called Panama and Paradise Paper leaks.
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More than 2000 companies were named in the former, leaked in 2016 and over 500 were listed in the Paradise Papers last year.
But the Sars boss, who was speaking in Pretoria, says they are taking steps.
"We are putting a document [sic] for government to be able to see what strategies are we going to put in place as to how to limit the huge amounts of money that are leaving the African continent," Moyane told reporters.
The African continent is said to have lost over $1 trillion or R120 trillion since the 1970, says the Tax Justice Network.
Illicit financial flows, especially by the elite, are significantly impeding the continent's potential growth.
And despite Moyane's assurances, unless decisive steps are taken, TJN states illicit financial flows "will continue to allow a cosy relationship between capital and politics that undermines democracy and the rule of law".