13 May 2015
The South African Communist Party (SACP) is seriously concerned that our country`s tax laws have not kept pace with the continuously changing technological world and, in particular digitalised avenues of trade, retail and financial transactions. The SACP is calling on government, particularly the economic cluster of ministries to look into this matter with the urgency that it deserves. There are many products and services which are traded online, involving financial transactions with payments made from and delivery into South Africa on electronic gadgets used in the country - but on which VAT is not paid by multi-national corporations. Our country has lost billions of Rand in tax revenue from these transactions. Moreover, this arrangement disadvantages local South African companies who do pay VAT.
As reported by IT-Online on Monday, 12 May 2015 from a study conducted by auditing firm Price-waterhouse-Coopers, South Africa`s "tax laws have not kept pace with the growth of the digital economy and changes in the way in which business is conducted - they were designed at a time when today`s technology and business models were the work of science fiction and the ability of a company to conduct business in a country required a physical presence in the country". Many of the transnational corporations trading online in South Africa via digitalised electronic platforms do not have any physical presence in the country, and consumers are left without any protection on transactions gone wrong.
Meanwhile, South African-based enterprises and consumers are required to pay tax, including VAT on goods and services. This difference in treatment transcends in prices and destroys local economic and enterprise development including co-operatives and therefore inhibits production and industrialisation in our country. All trade and retail transactions and income made from payments processed in the South African territory must be subject to the tax laws of our country as common standard regardless of whether they are physical or digital.
While South Africa is regarded as one of the most unequal societies in the world, it is important to realise that this inequality is not unrelated to the predatory role played by external transnational corporations siphoning revenues out of our country. Sky-rocketing sums of surplus from production and exchange taking place in South Africa are expatriated to the United States, Europe and Japan, in the main, where the 0,1 percenters enrich themselves. The SACP calls on the government to act now in closing tax loop-holes as part of the broader struggle to roll back the deepening crisis of both national and international inequality.
Issued by the SACP
Contact:
Alex Mashilo - Spokesperson
Mobile: 082 9200 308
Office: 011 339 3621/2
Twitter: SACP1921
Facebook Page: South African Communist Party