Commission flags ‘tax exploits’ by companies operating in South Africa

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Global platforms such as Google and Apple have the benefit of being able to exploit tax competition and tax havens to reduce their overall tax burden, says South Africa’s Competition Commission.

The regulator published the findings of its Online Platforms Market Inquiry on Wednesday which raises numerous concerns about these international companies and the controlling power they have in the South African market.

“One concern with the tax arrangements of global digital companies is that the country where the income is sourced are denied the tax payments where global platforms use domicile arrangements to pay in another jurisdiction typically at a lower rate.” “For instance, in the travel & accommodation platform category, Booking.com is the largest platform and has historically benefitted from an Innovation Box Tax break from the Dutch Authorities – which accounted for $230 million in 2021. In addition, Booking Holdings is subject to a US federal tax rate of 21% according to its SEC 10k filing. In contrast, profitable domestic platforms pay a 28% corporate tax rate.

 

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