Judge Davis wants further probe into profit shifting in SA
The tax committee head wants an investigation into the ‘significant leakage’ that is robbing the fiscus of at least R7bn a year
Head of the now-terminated Davis Tax Committee, Judge Dennis Davis, believes further investigation is required into base erosion and profit shifting, which is estimated to be robbing the fiscus of at least R7bn annually. Davis said in an interview with Business Day on Thursday that he would be speaking to finance minister Tito Mboweni about whether further work should be undertaken into what is being done by both multinationals and SA-owned companies to shift their profits offshore in order to avoid SA’s higher corporate tax rate. At 28%, SA’s corporate tax rate is four percentage points above the world average. The judge said recent studies had shown that profit shifting by multinationals alone was a “significant leakage” in the system. With the Treasury having no further room to manoeuvre in raising taxes in the current context of low economic growth, other sources of revenue had to be found, he said. One way would be to clamp down on profit shifting. Davis said one mechanism for ...
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