EFF to introduce private bill to combat ‘aggressive tax avoidance’ by multinationals

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The EFF is working on a private member’s bill that it says will eliminate legal loopholes and grey areas that allow multinational corporations to avoid paying billions in tax. 

This will boost revenues for the SA Revenue Service (SARS), it said. 

An announcement that the party will introduce its Draft Anti-Avoidance of Tax Bill, 2018, as a private member’s bill, was published in the government gazette on Thursday. 

The draft bill will be introduced by EFF MP Floyd Shivambu.  

Shivambu, describing the need for a bill, said multinational companies operating in SA and local companies listed abroad engage in a continuous cycle of aggressive tax avoidance “that is costing the country billions of rands in tax revenue”.

“The Report of the High-Level Panel on Illicit Financial Flows from Africa found that between 1970 and 2008, South Africa lost R1.208 trn because of aggressive tax avoidance. Yet very few tax avoidance cases have been taken to court, as the current tax laws are outdated and do not account for the fact that the difference between illegal tax evasion and legal tax avoidance is more blurred than ever due to current economic policies and the financialisation of the world economy.”

He said there was an urgent need to craft “robust and up-to-date” tax laws that would enable SARS to tax multinational corporations more effectively. 


Tax evasion vs. tax avoidance

The difference between illegal tax evasion and legal tax avoidance must also be clearly delineated, he said. 

Shivambu said that, under the guise of legal tax avoidance, billions in tax rands were leaving the country illegally. 

He said the draft bill would introduce strong penalty regimes for companies that participated in aggressive tax avoidance schemes.

In addition to the tax avoidance bill, the EFF will introduce two more private member’s bills. 

EFF MP Hlengiwe Mkhaliphi is set to introduce a draft insourcing bill which will require all government departments and state-owned companies to insource all services that they provide on a recurring basis.

Veronica Ntombovuyo Mente, meanwhile, also an EFF MP, will introduce a draft bill to ban the advertising of alcohol and liquor from all forms on media. 

Private member’s bills are draft laws introduced by individual MPs. A date for the official introduction of the bills has not yet been set.