Illicit Financial Flows & Base Erosion and Profit Shifting – focus on prosecutions

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Finance Standing Committee

30 August 2017
Chairperson: Mr Y Carrim (ANC)
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Meeting Summary

The Standing Committee on Finance, together with the Portfolio Committees on Trade and Industry; Mineral Resources; and Police, met with the Directorate for Priority Crime Investigation, the National Prosecuting Authority, South African Revenue Service, Financial Intelligence Centre, South African Reserve Bank, National Treasury and Department of Trade and Industry, and the Department of Mineral Resources to focus specifically on investigations and prosecutions of transgressions, Illicit Financial Flows (IFFs) and Base Erosion and Profit Shifting (BEPS).

The Directorate for Priority Crime Investigation (DPCI) pointed out that IFFs and BEPS typically originate from three sources; namely: commercial tax evasion, trade misinvoicing and abusive transfer pricing. Criminal activities include: drug trade, human trafficking, illegal arms dealing, and smuggling of contraband; and bribery and theft by corrupt government officials. DPCI has a good working relationships with various departments and statutory bodies in an effort to fight IFFs. DPCI received 54 referrals falling within the definitions of IFFs and BEPS, with the majority of the cases sitting with the Gauteng and KwaZulu-Natal circuits. 23 referrals had resulted in case dockets being opened. Of the 23 cases, 12 were under investigation, 10 had been closed as undetected and one was withdrawn as accused is deceased.

The National Prosecuting Authority (NPA) was appreciative of the committees’ efforts to bring the statutory bodies dealing with IFFs and BEPS in one room. This enabled more collaboration as the reality was that the various stakeholders were working in silos. The vast volume of cases going through the NPA systems required a multi-stakeholder approach. The Asset Forfeiture Unit, in partnership with DPCI’s financial assets investigation unit, was looking into specific areas. Priority was being given to criminal investigations and prosecution of individuals involved in IFFs. 11 cases had recently been concluded, with a collective value of R960 million.

The Financial Intelligence Centre (FIC) reiterated the need to establish a multidisciplinary taskforce to fight IFFs and BEPS. Commitments had been made to overcome some of the silos and efforts were being directed towards targeting and tracking suspicious activities in collaboration with the other statutory bodies. It emphasised the need for skills sharing, dedicated forensic capabilities that would retain institutional memory, and dedicated capacity. Perennial outsourcing was not the best and the entire value chain had to be effective. The need for consistent outcomes and meaningful impact was well understood.

The South African Revenue Service (SARS) underscored its commitment towards fighting IFFs and emphasised the need for collaboration and coordination. The fight against IFFs required high levels of coordination. SARS would participate in the collaborative endeavours as suggested. As part of the initiatives to deal with complexities of IFFs, SARS was on a capacity building drive. The drive entailed the sourcing, hiring and training of the best human resources in the market. Currently, a team of 25 was dealing with high net worth individuals and a team of 13 dealt with BEPS. On progress in relation to the Panama papers, two pilot audits on an individual and a company had been conducted.

The South African Reserve Bank emphasised the importance of collaboration and information sharing in efforts towards dealing with illicit finance. A multiagency task team had been established to deal with IFFs on all operational levels. Collaborative efforts involved joint investigations, sharing of information, reporting matters to other agencies, training and others. 110 new IFFs cases had been opened by the Financial Surveillance Unit since April 2017, mostly based on reports from authorised dealers and monitoring of transactions by the unit. Blocking orders issued since April 2017 amounted to R155 million and forfeiture notices published since April 2017 amounted to R9 million. 51 cases with estimated contraventions to the sum of R4.5 billion had been referred to law enforcement agents.

National Treasury said very little progress had been made in tackling IFFs. Not a single big case had gone to court. There were structural issues and more importantly a lack of will. Stakeholders were not meeting enough, if at all, as committed to during previous engagements. The lack of significant inroads was frustrating.

The Department of Trade and Industry (DTI) said it was in a position to point out suspicious transactions through reportable irregularities identified through audits. The Independent Regulatory Board for Auditors could then make a determination as to whether such cases were to be referred to the Companies and Intellectual Property Commission or DPCI. In an effort to deal with BEPS, an amendment process to the Companies Act had commenced and a cluster document was being finalised.

The Department of Mineral Resources said the challenge of IFFs was being taken seriously as it undermined tax legislations and eroded the domestic revenue base. On challenges and interventions, the department was dealing with the following: illegal mining activities- ‘zama zamas’ and medium to large scale often linked to international syndicates, non-compliant small scale mining, large licensed companies which do not declare resources mined outside their licensed area, transfer pricing, and BEPS. Approaches to deal with these challenges were wide-ranging and proactive.

The Standing Committee on Finance researcher identified the confusion on the conceptualisation of the term illicit finance as a challenge in the fight against same. Some aspects of IFFs were not encapsulated as forms of crime. Gaps could be addressed through the Organised Crime Act.

Members said interdependence between the statutory bodies was essential to deal with identification, reporting and investigation of crimes. The real and exact issues delaying progress had to be pointed out. Was there need to strengthen legislation to enable effectiveness of the units? They asked for assurance that investigations by law enforcement bodies were not being held back by influential politicians. There were lots of discussions about plans, but what had been done on the ground?
The Chairperson said the committees had committed to meeting on IFFs four times a year. Statutory bodies had to work together in efforts to fight IFFs. The committees believe that unless there was a significant number of prosecutions and convictions, IFFs will escalate. The committees welcomed the multi-agency structure but felt that there was a consummate lack of progress. The basic test was the number of cases in court. There were staggering amounts of money leaving the country illegally and there was a desperate need to raise more revenue, especially with a projected 0.5% growth rate. It was just not acceptable that there were so few cases in the court and none since the March meeting.
 

Meeting report

Department of Priority Crime Investigation presentation
Lt General Yolisa Matakata, Acting National Head: Directorate for Priority Crime Investigation (DPCI), took the joint committees through a presentation on illicit financial flows (IFFs) and base erosion and profit shifting (BEPS). IFFs and BEPS typically originate from three sources; namely: commercial tax evasion, trade misinvoicing and abusive transfer pricing. Criminal activities include: drug trade, human trafficking, illegal arms dealing, and smuggling of contraband; and bribery and theft by corrupt government officials. DPCI has a good working relationship with various departments and entities in an effort to fight IFFs. Stakeholder contributions were in terms of the identification of illicit money flows- coming in and leaving the country, bridging the gap between law enforcement and banks; identification of suspicious transactions and tax non-compliance. DPCI handled investigations with assistance from the South African Police Service’s (SAPS) Crime Intelligence Unit in drafting terms of reference and identification of intelligence networks. It also closely worked with the Asset Forfeiture Unit (AFU) in confiscation of proceeds of crime, the National Prosecution Authority (NPA) as well as National Treasury for advice on financial regulatory drivers mostly on Public Finance Management Act breaches.

Referrals from the South African Reserve Bank (SARB) were contraventions of the Exchange Control Regulations and, therefore, fall within the ambit of the definition of IFFs. Referrals were either reported directly to the applicable investigative unit or to the DPCI head office for dissemination to the applicable units. Currently, 54 referrals fell within the definition, with the majority of the cases sitting with Gauteng and KwaZulu-Natal circuits. There was a follow-up mechanism keeping DPCI up to date on the progress. When matters were referred, there would be no crime identified yet; only reasonable grounds for suspicion. 121 referrals had been made to the DPCI as reported by the Financial Intelligence Centre. 23 referrals had resulted in case dockets being opened. However, in terms of the definition of IFFs, none of the 23 cases fall within the scope of illicit financial flows. Also, 12 were under investigation, 10 were closed as undetected and one was withdrawn as the accused is deceased.

A properly coordinated multi-agency forum had been established to look at possible cases identified as IFFs.
The forum would report regularly on progress made on identified cases and this would assist the country in preparing a typology report on IFFs. Challenges hampering progress included office accommodation (National and Provincial), retention of employees (specialised skills), operational independence (interpretation of the SAPS Amendment Act, Act 10 of 2012), and administrative interdependence with SAPS.

Discussion
The Chairperson said the committees had committed to meet at least twice a year to discuss IFFs and BEPS since early 2014. The committees welcomed the multi-agency structure but felt that there was a consummate lack of progress. The basic test was the number of cases in court. There were staggering amounts of money leaving the country illegally and there was a desperate need to raise more revenue, especially with a projected 0.5% growth rate. It was just not acceptable that there were so few cases in the court and none since the March meeting.

Mr A Lees (DA) expressed disappointment that there were only 23 referrals which had resulted in case dockets being opened. Also, the values involved had not been disclosed. What were the consequences? Had people been prosecuted? Statistics were paramount. There were lots of discussions about plans, but what had been done on the ground? Was DPCI dealing with the Jonas Makwakwa matter that has been sitting with it for 18 months?

Mr D Maynier (DA) asked for an update on the corruption case he had lodged with the courts early this year in relation to the Gupta family, Mr Mosebenzi Zwane and others in respect of money laundering. Was the matter under investigation? Also, there was no action and progress in dealing with IFFs because of a political decision by the ANC to dissolve the Scorpions. The Chairperson and his colleagues were responsible and should be prepared to apologise. Were ANC members prepared to apologise for voting in support of the Bill to dissolve the Scorpions?

Lt Gen Matakata replied that the investigations were underway and spearheaded by an able team within the Hawks. The Jonas Makwakwa case was under investigation and Members would be updated in due course.

Ms N Louw (EFF) was disappointed that the presentation did not address real empirical issues. The proposal to establish another forum was unhelpful. Individuals had to do their job and do it properly.

Mr A Williams (ANC) said vast amounts of money was leaving the country. It seemed as if DPCI was running around in circles. What were the bottlenecks stalling progress?

Mr N Nkwankwa (UDM) shared the sentiments that the presentation was not addressing real issues. Members wanted to hear about progress on the ground. It seemed as if the different statutory bodies were working in silos. There was little coordination. Was there enough commitment on the part of government to fight illicit finance? Was there enough leadership and political commitment?

Mr Z Mbhele (DA) asked what the 54 referrals brought before DPCI were in relation to. He asked for a breakdown and context. What were the timeframes for the cases? What was the average time length for investigations and finalisation of cases? Also, personnel capacity was imperative. How many members of DPCI spearheaded investigations as part of serious and commercial crime units? Holistic and effective driving of cases was crucial.

Mr D Hanekom (ANC) agreed that rehashing definitions of IFFs was not the crux. Members wanted to hear about effective action being taken to deal with same. Was the legislative framework a challenge? What was DPCI doing to spruce up personnel capacity? ANC members were equally concerned about illicit finance. The allegations surfacing from the Gupta emails were a serious concern. Huge amounts of money were involved. He asked for assurance that investigations by law enforcement bodies were not being held back by influential politicians. He asked if DPCI had ever been instructed or dissuaded to pursue certain investigations due to a fear factor.

Nkosi Z Mandela (ANC) asked for an indication as to how many referrals for cases in the mining sector were under investigation. What was being done to fight illegal mining? What measures were being taken to identify and nip the lucrative market for illegal minerals? Huge sums of money were being lost through illegal mining channels.

Lt General Matakata replied that DPCI was working with other law enforcement agencies outside the country, mainly in Europe, and was receiving mutual assistance from other jurisdictions. There was progress in dealing with illicit finance within the illegal mining space. She agreed that there was fragmentation internally within DPCI, and that was being addressed.

Mr F Beukman (ANC) asked if SAPS had established a research unit as the absence of it had been identified as a challenge during previous engagements.

Ms J Fubbs (ANC) said the presentation was enlightening. She asked if DPCI was able to deal with transfer pricing.

The Chairperson felt what was stalling progress was not a lack of policy and a robust legislative framework, but a lack of political will. Decisive action was long overdue, and the lack of coordination was abysmal. The suspicious transaction reports presented by DPCI were not credible. The figures were staggering in comparison to what was presented. He urged DPCI and other law enforcement agents to do more. Skills improvement and joint training was crucial. More commitment and capacity was important as the magnitude and impact of IFFs was catastrophic. Mr Maynier’s comment that the dissolution of the Scorpions was to blame for the failure to deal with illicit finance was utterly absurd. The Scorpions were utterly political and were playing an active role in the ANC’s internal affairs. The Hawks (DPCI) too had become politicised and had to act in terms of the law- that was a general sense which may not be provable. Why were the Hawks not acting on the leaked Gupta emails? It was a credibility issue and if people were innocent, the courts had to prove them so. There was a view that failure to act was not due to a lack of skills and capacity but because the Hawks were deliberately doing a shoddy job.

Lt General Matakata replied that DPCI was not being instructed by anyone. All cases referred to it including those in the state of capture report were being investigated. It had a responsibility and obligation to update the Minister of Police on progress, and that was being done. The expectation to arrest individuals was well understood, but there was a need for thorough investigations. Some cases were complex.

The Chairperson deplored the delays in finalising cases. It was about deterrence, not just being punitive. The issue was not solely about the dealing with allegations linking the Gupta family but everyone committing criminal offences. The cases in the public domain had to be prioritised to restore confidence.

Ms Fubbs asked if DPCI had the specialised skills to deal with cases effectively.

Lt Gen Matakata indicated that DPCI did have the capacity but some of the specialised skills had to be sourced externally. Some of the cases required forensic expertise that had to be sourced externally, mainly from the private sector through Treasury sanctioned processes.

Mr S Luzipho (ANC) said interdependence between the statutory bodies was essential to deal with identification, reporting and investigation of crimes. The real and exact issues delaying progress had to be pointed out. Was there a need to strengthen legislation to enable effectiveness of the units?

Mr Beukman said the Hawks should have its own budget vote. Relying on budget allocation approvals from SAPS was a cumbersome process. That was a clear recommendation from the Portfolio Committee on Police which believed this would assist in strengthening its capacity.

Nkosi Mandela asked what the law enforcers’ priorities were in relation to crimes within the mining space. Was DPCI’s priority at the source of the crimes to prevent illegal operations or the end products in the form of confiscating smuggled minerals?

Ms Louw sought clarity on cases being outsourced for the past three years. She asked for a breakdown on the costs and the particular cases being outsourced.
Mr J Lorimer (DA) found it difficult to believe that DPCI was doing enough to deal with illegal mining. Leakages have been going on for years and nothing was being done. Did DPCI ever investigate illegal sand mining?

The Chairperson said consideration should be given to the recommendation that the Hawks have its own budget vote. He emphasised the need for internal forensic capacity. Sourcing capacity from the private sector was problematic. Members had to apply their minds and consider regulation for coordination. How can the committees assist the Hawks to conduct their work effectively? Why would Treasury not agree with the request that Hawks have its own budget?

Mr Ismail Momoniat, DDG: Tax and Fiscal Policy, National Treasury, said he found it very hard to believe that DPCI budgeting and allocations was the main issue stalling progress. He felt it was a side issue. Also, financial regulators and law enforcement agents needed to identify transgressors. He asked if the Oakbay case reported by former Minister Pravin Gordhan had been dealt with.

Ms Fubbs asked what was preventing DPCI from undertaking investigations on reported cases especially in relation to transfer pricing. What were the actual risks thwarting progress?

Mr Mbhele said the bone of contention in the relationship between the Hawks and SAPS was not financial interdependence but operational dependence. Separate budget votes would not necessarily address the challenges of procurement processes.

The Chairperson asked why DPCI was not following up on matters given its specialised role and the magnitude of cases being dealt with.

Lt Gen Matakata replied that DPCI had an obligation to give feedback to complainants. She requested that comprehensive feedback be provided in writing.

Ms Fubbs asked where blockages were in concluding investigations. The blockages had to be ascertained.

Lt Gen Matakata replied that DPCI had a good working relationship with other entities such as Treasury which made referrals and provided support in dealing with cases. There were no identifiable blockages.

The Chairperson emphasised the need to strengthen in-house forensic and specialised skills capacity. He urged the head of DPCI to ascertain that cases were attended to expeditiously.

National Prosecuting Authority (NPA) input
Ms Melanie Govender, Acting Special Director: Public Prosecutions, NPA, was appreciative of the committees’ efforts to bring the statutory bodies dealing with IFFs and BEPS in one room. This enabled more collaboration as the reality was that the various stakeholders were working in silos. The vast volume of cases going through the NPA systems required a multi-stakeholder approach. Furthermore, the slow movement in concluding cases should be viewed not as a failure but as a result of lack of collaborative coordination.

The Asset Forfeiture Unit, in partnership with DPCI’s financial assets investigation unit, looked into specific areas. Priority was given to criminal investigations and prosecution of individuals involved in IFFs. 11 cases had recently been concluded, with a collective value of R960 million. Five focus areas had been identified and the asset forfeiture unit was specifically targeting materials used to commit crimes, such as trucks used for sand mining as well as machinery and refineries accepting illegal ore. Currently, reporting mechanisms were failing the unit but the processes were being revised to ensure credible and consistent mechanisms.

Discussion
Ms Fubbs said it was encouraging to hear that the Asset Forfeiture Unit was in the process of revising its reporting mechanisms. It would have to be expedited.

Mr Mbhele asked if capacity within the NPA was sufficient to effectively carry out specialised investigations. If not, what interventions could assist?

Mr Lees asked if the Jonas Makwakwa case was in the Asset Forfeiture Unit’s domain.

Mr Lorimer said the NPA had to exert more effort. He was convinced that the NPA could do more in bringing transgressors in relation to IFFs to book.

The Chairperson said input from the NPA was somewhat glib. The NPA was not doing enough given the magnitude of the challenges the country was grappling with. The figures brought forth were so miniscule. How many individuals from big mining companies had been jailed for IFFs and BEPS given the gravity of the matter? Why were there no figures on prosecutions in each sector of the economy? How many BEPS had been investigated and in which sectors of the economy? The ceiling was too low.

Mr Luzipho said the statutory bodies and entities had to determine and articulate their limitations clearly to assist the committees in coming up with relevant legislation. In the absence of a robust legislative framework, there would be limited room for success.

The Chairperson agreed with the sentiments. The statutory bodies had to advise if there was a lacuna in the legislative framework. He urged coordination to the farthest extent as possible.

Ms Govender replied that the skills to investigate illicit flows were present. However, some skills sets were required for much more specialised cases especially within the BEPS space. She reassured the committees that any matter which was a focus area, such as corruption and money laundering, became NPA’s priority. The Asset Forfeiture Unit always worked closely with the NPA in any criminal case where there was a loss to state and benefit to individuals, with the view of recovering the loss incurred. Two significant cases involving corruption were being finalised. These cases were reported in 2009. The length of time to conclude matters was chiefly determined by the complexity of the matters being handled. She felt the NPA was being measured in terms of the number of successful prosecutions and convictions. However, successful outcomes were not necessarily a reflection of the effort exerted.

The Chairperson said concerns were well understood. However, the public wanted to see individuals appearing in court and going to jail. What can the committees do to assist the NPA conduct its work more effectively?

Ms Govender asked for time to identify challenges within the legislative framework as a collective and present to the committees in due course.

Mr Hanekom suggested that a timeframe be put in place for the agencies to meet to identify their challenges.

Financial Intelligence Centre input
Mr Murray Michell, Director, Financial Intelligence Centre (FIC), reiterated the need to establish a multidisciplinary taskforce to fight IFFs and BEPS. Commitments had been made to overcome some of the silos, and efforts were being directed towards targeting and tracking suspicious activities in collaboration with the other statutory bodies. He emphasised the need for skills sharing, dedicated forensic capabilities that would retain institutional memory, and dedicated capacity. Perennial outsourcing was not the best and the entire value chain had to be effective. The need for consistent outcomes and meaningful impact was well understood. He applauded the multi-stakeholder engagements with the committees as they cultivated transparency and coordination.

South African Revenue Service input
Mr Randal Carolissen, Executive, SARS, underscored SARS’ commitment to fighting IFFs and emphasised the need for collaboration and coordination. The fight against IFFs required high levels of coordination. SARS would participate in the collaborative endeavours as suggested. Furthermore, the implementation of an international reporting framework would enable much more intelligence to come into the fore. SARS was active in various international groupings enabling it to exchange more data and intelligence on illicit finance.

Ms Refiloe Mokoena, Legal Counsel, SARS, added that SARS was one of the early adopters of the BEPS framework. Regulations and a robust reporting framework enabled it to monitor outflow of funds more effectively.

Ms Mogola Makola, Chief Officer: Enforcement, SARS, said as part of the initiatives to deal with complexities of IFFs, SARS was on a capacity building drive. The drive entailed the sourcing, hiring and training of the best human resources in the market. Currently, a team of 25 within SARS was dealing with high net worth individuals and a team of 13 dealt with BEPS. On progress in relation to the Panama papers, two pilot audits on an individual and a company had been conducted.

South African Reserve Bank input
Mr Thys Basson, Divisional Head: Compliance and Enforcement, SARB, underscored the importance of collaboration and information sharing in efforts towards dealing with illicit finance. A multiagency task team had been established to deal with IFFs on all operational levels. Collaborative efforts involved joint investigations, sharing of information, reporting matters to other agencies, training and others. 110 new IFFs cases had been opened by the Financial Surveillance Unit since April 2017, mostly based on reports from authorised dealers and monitoring of transactions by the unit. Blocking orders issued since April 2017 amounted to R155 million and forfeiture notices published since April 2017 amounted to R9 million. 51 cases with estimated contraventions to the sum of R4.5 billion had been referred to law enforcement.

National Treasury input
Mr Momoniat said very little progress had been made in tackling IFFs. Not a single big case had gone to court. There were structural issues and more importantly a lack of will. Stakeholders were not meeting enough, if at all. Treasury had urged various statutory bodies to come forth as it had information on suspicious activities. The statutory bodies had not come forth. For instance, funds meant to rehabilitate mines were being abused and SARS had been notified. There was need to strengthen mechanisms to get answers. Moreover, the committees and stakeholders had to put some thought into how certain pieces of information could be made available to Treasury and other statutory bodies as a matter of public interest. The lack of significant inroads was frustrating. The crux of the matter was a lack of accountability of institutions and why to this day there had not been major cases being brought to court.

Department of Trade and Industry input
Mr Desmond Ramapulana, Director: Commercial Law and Policy, Department of Trade and Industry (DTI) noted that DTI was in a position to point out suspicious transactions through reportable irregularities identified through audits. The Independent Regulatory Board for Auditors could then make a determination as to whether such cases were to be referred to the Companies and Intellectual Property Commission or DPCI. In an effort to deal with BEPS, an amendment process to the Companies Act had commenced and a cluster document was being finalised. The proposed amendments had already been identified.

Department of Mineral Resources input
Adv. Thabo Mokoena, Director General: Department of Mineral Resources, said the challenge of IFFs was being taken seriously as it undermined tax legislations and eroded the domestic revenue base. On challenges and interventions, the department was dealing with the following: illegal mining activities- ‘zama zamas’ and medium to large scale often linked to international syndicates, non-compliant small scale mining, large licensed companies which do not declare resources mined outside their licensed area, transfer pricing, and BEPS. Approaches to deal with these challenges were wide-ranging and proactive.

Challenges and interventions were segmented from the lowest levels of individual illegal miners up to international buyers. Progress on MOUs between the Department of Mineral Resources and SARS, stalled awaiting final outcomes of the Davies Commission, were to be finalised in earnest. Continual sharing of information between relevant authorities and refinement of information systems was crucial.
Committee Researcher’s input
Mr Zakhele Hlophe, Researcher: Standing Committee on Finance, identified the confusion on the conceptualisation of the term illicit finance as a challenge in the fight against same. Some aspects of IFFs were not encapsulated as forms of crime. Gaps could be addressed through the Organised Crime Act. Also, a coherent framework of suspicious transaction reporting was necessary. In addition, it had to be understood why the output on IFFs investigations and successful prosecution was very low.

Discussion
Mr Lees said for SARS to say that there had not been significant progress in investigating matters on the Panama papers, 18 months after the leak, and that there were only two pilot investigations which had also not been finalised was astounding. Unless the implementation and compliance frameworks were effective, there was every incentive not to comply.

Nkosi Mandela asked if mining inspections were collaborated between the various agencies. There was no clear mechanism of measuring output and of ensuring accountability of mineral resources. Between the Department of Mineral Resources, SAPS and DPCI, who was leading the fight?

Mr Mbhele asked FIC and SARS if they had adequate and sufficient scope to identify and monitor trends linked to criminal syndicate networks.

Ms Fubbs hoped SARB was looking into transfer pricing and technical interventions such as forcing audit companies to comply with legislation in this regard. Cases of money laundering and illegal gambling had to be dealt with decisively. Also, how could transfer pricing be classified- as tax avoidance or evasion?

Mr Michell, in response, said FIC was working with supervisory bodies to deal with gambling.

Mr Momoniat added that transfer pricing could only be identified and ascertained when SARS was assessing corporate tax information. BEPS reforms would hopefully close most of the loopholes.

The Chairperson said the finance committee was looking into how transfer pricing could be classified. The input by SARS was not particularly helpful as it was too general. The committees were expecting comprehensive responses to questions from Members within 10 days. Whatever the answers, the empirical test would be to have law breakers in court.

Ms Makola said SARS was following due process and pilot audits in relation to the Panama papers leak were likely to be finalised soon. Currently, transfer pricing was not classified as a criminal matter but was dealt with in the current legislative instruments.
The Chairperson said the committees had committed to meeting on IFFs four times a year. Statutory bodies had to work together in efforts to fight IFFs. The committees believe that unless there was a significant number of prosecutions and convictions, IFFs will escalate.

The meeting was adjourned.

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