South Africa says tax collection up, evasion 'endemic'

South Africa's revenue service collected 60.6 billion rand more in corporate taxes in 2006/07 than the previous financial year, but evasion remains "endemic", the head of its tax body said on Wednesday.

Pravin Gordhan, South African Revenue Service commissioner, said authorities might be forced to impose harsher penalties to crack down on a growing trend among businesses to dodge or cheat on their taxes.

"This is becoming an endemic behaviour," Gordhan said, adding that the problem may require new laws "so that there are some penalties of a more severe order than we have at the moment."

He said 72 companies in various sectors, mainly manufacturing and communication, were guilty this year of deliberately not paying the proper tax rate on time.

Corporate taxes in 2006/07 totalled 150.3 billion rand from 89.7 billion rand the previous fiscal year.

South Africa collected a bigger-than-expected 496 billion rand in total taxes this year, helped by strong economic growth and more efficient collection by authorities.

However, Gordhan said companies frequently declared lower profits in order to avoid paying high taxes.

"Corporate South Africa is falling behind best practice in certain parts of the world," he said.

"Issues around tax, tax compliance and tax planning are not sufficiently on the corporate governance agendas of boards of companies in South Africa," Gordhan said.