GFI revises scale of South Africa’s misinvoicing

Global Financial Integrity (GFI) has revisited South Africa to look at how much the country lost in tax revenues in 2016 due to misinvoicing, and has apparently concluded that revenue losses due to misinvoicing amount to less than an earlier GFI estimate.

In its latest estimate, the non-profit organisation that researches and lobbies for action against illicit financial flows (IFFs) estimates that South Africa lost approximately US$3.4 billion in tax revenues to trade misinvoicing, or about 4 per cent of total tax revenues collected in South Africa in 2016.

GFI analysis

Using its own value gap analysis methodology, GFI analysed approximately US$49.1 billion of South Africa’s imports and US$50 billion in exports, comparing the South African records with its trading partner records for 2016.

GFI identified approximately US$9.9 billion in misinvoiced imports and US$9.2 billion in misinvoiced exports.

It also identified approximately US$2.2 billion in revenue losses due to import misinvoicing and US$1.1 billion in revenue losses due to export misinvoicing, leading to a total estimated revenue loss of US$3.3 billion in 2016.

Discrepant estimates

In November 2018, GFI published an analysis of South Africa’s potential revenue losses associated with trade misinvoicing, finding losses of approximately US$37 billion in revenue between 2010-2014.

This equated to an annual average of US$7.4 billion, apparently a much higher figure than the US$3.3 billion GFI now estimates South Africa lost in 2016.

Categories: Trade Based Financial crimes News

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