TAX THE SCUM: Should South Africa risk a trade-war with US by taxing Google, Facebook, etc?
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[Yes, tax the scum. Jan]"The French tried, and immediately the US retaliated with tariffs on their wine," warns Wally Horak. "You must satisfy the US."
South Africa is desperately trying to expand its extremely narrow tax base.
The economy is toast; it will not be easy.
Taxing the digital economy has the potential to plug gaping gaps in the country’s budget.
Should South Africa arouse the ire of the richest, most powerful country in the world? © Elnur Amikishiyev/123rf
However, the unilateral introduction of a digital tax by the South African Revenue Service (Sars) poses considerable challenges.
A digital tax will hit American companies hard; does South Africa have the might to take on the US in a trade war?
Kieno Kammies asked Wally Horak, a Tax Executive with Bowmans, to explain the issue in plain English.
The digital economy was already massive before Covid…
Wally Horak, Tax Executive – Bowmans
Google and Facebook do business in South Africa without being taxed. It’s very unfair to bricks-and-mortar businesses… these multinationals should be paying the same tax as any other supplier in South Africa…
Wally Horak, Tax Executive – Bowmans
… they only want to tax the selling portion of profits, as if those multinationals had a sales office in South Africa…
Wally Horak, Tax Executive – Bowmans
The French tried to impose taxes on Google and Facebook and immediately the US retaliated with tariffs on their wine… You must satisfy the US, or there’ll be trade wars…
Wally Horak, Tax Executive – Bowmans
At the moment they are getting away with murder; why would they change? You have to force them to change – this tax might do it.
Wally Horak, Tax Executive – Bowmans
Sars has lost a lot of cases where double taxation agreements are involved… So, it’s difficult for Sars to unilaterally go for it. We might get retaliation from the US… You have to get international consensus…
Wally Horak, Tax Executive – Bowmans
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