Crime smokes lucrative tobacco market

Heavily armed criminal gangs are plundering the lucrative tobacco industry, carrying out at least four hijackings a day on vehicles transporting cigarettes.

“You ‘hit’ a vehicle transporting cigarettes and you strike gold,” said Francois van der Merwe, CEO of the Tobacco Institute of Southern Africa.

The tobacco institute claims that at least 6billion cigarettes consumed annually are either illegal (stolen and counterfeit) or illicit (undeclared or incorrectly packaged by the manufacturer to avoid paying tax).

Of the 6 billion illicit cigarettes sold annually, 3 billion were manufactured in the country.

He was commenting after Tabby Tsengiwe, the spokesman for British American Tobacco – one of the biggest distributors of cigarettes in South Africa – said yesterday that 1412 of its transport vehicles were hijacked annually.

This equates to about four attacks a day. In January, armed robbers attacked a BAT vehicle in Brackenhurst, south of Johannesburg. On the same day, a truck delivering cigarettes was robbed by seven men armed with R5 assault rifles in Diepsloot, north of Johannesburg.

In April, police arrested five men in King William’s Town, Eastern Cape, after they robbed a truck of cigarettes worth R180.000.

And according to a police report to the Gauteng portfolio committee on community safety in November last year, 20.5% of hijackings in the province involved BAT vehicles transporting cigarettes.

Criminologists, researchers and the cigarette industry say sophisticated and organised syndicates are reportedly moving away from cash-in-transit vehicles, ATMs and banks to softer targets such as un-armoured and unescorted vehicles distributing cigarettes across South Africa.

With the cigarette war escalating, criminologists are urging the government to do more to combat the crime.

The company said hijackers prized products that could be rapidly dispersed, which made trucks transporting fast-moving consumer goods vulnerable.

Van der Merwe said BAT was hardest hit by crime because of its huge distribution network system.

“The traditional way of delivery is through wholesalers.”

Because vehicles carry as many as 50 “master cases”, which contain about 10,000 cigarettes, a single attack could result in a syndicate “striking gold”.

With a single cigarette costing R3 on the street, they could make R30,000 from one hit.

“This is done mainly through excise manipulation, where not all produce is declared to SARS. Since 2010 South Africa has lost more than R22-billon because of illicit cigarettes,” he said.

Source: timeslive

Naspers attacks Google over international tax practices

google
Eric Schmidt

Google is once again under fire for its international tax practices. This time though, the flak isn’t coming from an international government, but South Africa’s largest online publisher.

In a statement issued to the press 24.com CEO Geoff Cohen said: “In the digital age, we accept that we compete with businesses from all over the world.

“However, it is clearly wrong that, as we invest in building a tax-paying business employing hundreds of South Africans, we are competitively disadvantaged through aggressive tax planning strategies of global businesses.”

The publisher, which is a division of emerging markets media and internet giant Naspers, says that Google’s use of various off-shore accounts for its transactions means that it’s not paying anywhere near as much tax in the country as it should be.

This it says, means that South African publishers are simply unable to operate on a level playing field with the internet giant.

As Memeburn pointed out in mid 2013, Google pulls in around R1 billion in advertising a year in South Africa.

That’s about as much as South Africa’s digital ad industry makes as a whole. Google makes this revenue with very little infrastructure development needed and with only a small satellite office of about 30 or so people.

24.com reckons that this puts lost tax revenue from Google at an estimated R140 million per annum in corporate taxes, and possibly a further R100 million in PAYE.

They resort to tax-avoidance strategies known as the ‘Double Irish’ or ‘Dutch Sandwich’.

Google however strongly denies that this is the case, especially when it comes to PAYE, noting that it pays that tax for every employee it has in South Africa.

When Memeburn approached Google for comment on Cohen’s statement, a Google spokesperson said the company “complies with tax laws in South Africa and every country where we operate.

Google has come under fire for its international tax policies in the UK after it emerged that it had paid just £6 million on £2.5 billion worth of sales in the country in 2012.

A number of countries have now instituted special Google taxes in a bid to curb that kind of behaviour.

The most recent country to institute a Google tax is Italy, which did so in December 2013.

Other countries, such as France, have issued Google with massive fines for tax non-compliance.

24.com is in favour of applying the former approach in South Africa. Significant legislative changes will be required before South African internet businesses will be able to compete with some of their global counterparts on a level tax playing field, it says.

The state appears to be heading in that direction, as it readies legislation that will force overseas companies selling digital goods to South Africans to pay VAT on those sales.

In a 2012 interview, Google Chairman Eric Schmidt said he was “proud” of the way Google had avoided paying taxes. “It’s called capitalism,” he said, “We are proudly capitalistic. I’m not confused about this.”

Source: Memeburn.com