SA Illicit tobacco trade costs the fiscus R5 billion a year

During a parliamentary briefing in Cape Town yesterday, the Standing Committee on Finance heard that a minimum of R5 billion was lost to the fiscus per annum through illegal tobacco trade in South Africa.

Yunus Carrim, chairperson of the committee, said this was completely unacceptable, and added that South Africa ranked in the top five countries in the world with the highest incidence of trade in illicit cigarettes.

“The committee believes that every cent due to Sars has to be collected, especially in view of the revenue shortfalls in recent years and the need to fund major pro-poor programmes,” said Carrim.

Research undertaken by global tobacco company Japan Tobacco indicates that R27 billion in tax revenue was lost from 2010 to 2016, with 23-50% of all cigarettes consumed in 2016 illicit (depending on the channel).

The report, entitled Illicit Tobacco Trade in South Africa, singles out under-declaration and tax evasion as the biggest problems - with almost 90% of all illegal tobacco products classified as tax-evaded or ‘Duty Not Paid’.

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