A tax case has emerged in South Africa involving a bank, an alleged gold smuggling ring, and accusations of cross-border money laundering. The scheme, known as the “Gold Mafia,” revolves around a Zimbabwean tobacco magnate, Simon Rudland, who is accused of running a black market cigarette operation. To launder the illicit earnings, his associates reportedly used a network of businesses, including a gold smuggling operation, and bribed officials in South African banks. Al Jazeera investigated the story in a 2023 documentary, which came after the South African Revenue Service (SARS) froze the assets of Rudland’s Gold Leaf Tobacco Corp in 2022. SARS then hit Sasfin Bank with a civil summons for ZAR 4.87 billion in January to recoup income tax, VAT, and penalties.
The crackdown on cross-border tax evasion in South Africa is yielding results, with SARS collecting a record ZAR 2.155 trillion for the 2023/24 financial year. This increase comes from targeted investigations into high-net-worth taxpayers and their international activities. Tax authorities across Africa are also focused on rooting out unreported income, as shown by the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes. African members identified more revenue in 2023 than they had in the previous 13 years combined, highlighting the progress made in building exchange of information relationships.
The fight against illicit financial flows is a major focus for African governments, with a significant increase in revenue identified through exchange of information on request frameworks in 2023. While progress has been made in increasing the volume of requests sent to partner countries, there are still challenges to ensure all members can benefit equally from the framework. Monitoring the impact of EOI data on revenue gains and improving beneficial ownership transparency are ongoing priorities for African countries, with efforts to address compliance issues and provide timely and high-quality information to partners.
African countries are also looking inward to improve trade relationships within the continent. In early June, some governments set an ambitious target for intra-African trade to account for 50% of the continent’s trade activity by 2030, in contrast to the current level of 14%. As intra-African trade grows, the opportunities for cross-border tax evasion also increase. However, there has been a positive shift towards intra-African information exchange, with nearly 30% of African exchange of information requests made to continental colleagues in 2023. This trend indicates a willingness to collaborate and cooperate across borders to improve and expand exchange of information activities.
Overall, the progress made by African countries in exchange of information frameworks and in targeting tax evasion is significant. While challenges remain, such as improving beneficial ownership transparency and monitoring revenue gains from EOI data, the continent is making strides in rooting out illicit financial flows. With a focus on collaboration and cooperation both within Africa and internationally, African tax authorities are positioning themselves to further boost revenue collection and combat tax evasion effectively.
