Tag: South Africa

Revenue Service Urged to Step up Enforcement

Photo: syahrir
The South African Revenue Service (SARS) is failing to use all the tools at its disposal to combat the illicit cigarette trade that is depriving the country of billions of rand in desperately needed taxes, British American Tobacco South Africa (BATSA) wrote in a press release.
On the day that independent research revealed tax-evading cigarettes are now on sale in almost half of stores nationwide, SARS Commissioner Ed Kieswetter appeared to admit defeat when he told MPs the illegal tobacco trade was a problem “significantly bigger than SARS.”
In response, BATSA General Manager Johnny Moloto said: “SARS has the power to tackle the manufacturers of illicit cigarettes and dramatically reduce the huge losses to our fiscus,” said BATSA General Manager Johnny Moloto. “But, for some reason, they are unwilling or unable to act.
“Production Counter Rules were instituted more than a year ago and this should mean all manufacturers are accountable for every cigarette they make. Yet SARS does not seem to be adequately enforcing their policy that would ensure these regulations are being followed.
“SARS published draft CCTV camera rules for public comments two months ago. In light of the commissioner’s own admission, we are calling on SARS to implement these rules as of January 2022 instead of June 2022 to strengthen the control of local production.
“All manufacturers should demonstrate that they follow the Production Counter Rules or explain what they are trying to hide.”
“SARS officials told MPs on Tuesday that the biggest problem is not smuggling, but illicit cigarettes being produced in this country,” said Moloto.
“They know the problem, and they should know who is responsible. Instead of throwing up their hands in despair, they should follow the money and catch the criminals who are siphoning billions out of our beleaguered economy.”
November 11, 2021
Illegal Cigarette Trade Hits Record Highs

Photo: Tobacco Reporter archive
South Africa’s illegal trade in cigarettes has hit record highs, a new IPSOS report shows.
At least two-thirds of stores in four hotspot provinces are selling cigarettes below the minimum collectible tax (MCT) of ZAR21.60 ($1.40). In Free State and Western Cape, the numbers rise to three in four stores.
“South Africa’s illicit cigarette trade—the biggest black market for cigarettes in the world—is now officially out of control,” said British American Tobacco South Africa (BATSA) General Manager Johnny Moloto in a statement.
“Over a year since the disastrous lockdown sales ban, the illegal networks it enabled and enriched continue to dominate the retail sector. They are destroying legal jobs and livelihoods and depriving the treasury of ZAR19 billion in cigarette excise for 2021 alone.
“Much-publicized efforts by SARS, SAPS and SANDF to disrupt these cartels have merely scratched the surface. Government has a duty to make this menace a national priority, enforce the law without fear or favor and rid our country of this revenue-sapping scourge once and for all.”
Following its fourth investigation of the year into the tobacco trade, IPSOS’ new report reveals: illegal cigarettes are available in almost half of stores (43 percent) nationwide; cigarettes are selling for the equivalent of ZAR8 per pack, almost less than one-third of the MCT; the number of forecourts selling illegal cigarettes has almost tripled in the past four months; and the number of stores in Northern Cape selling illegal cigarettes (63 percent) has quadrupled in the past four months.
The latest IPSOS fieldwork was carried out from Oct. 8–15, 2021, and follows similar studies in March, February and June of this year. Using the mystery shopper model, the researchers bought the cheapest cigarettes in 4,486 stores nationwide.
November 9, 2021
South Africa Asked to Tackle Smuggling

Photo: Tobacco Reporter archive
The major legal cigarette manufacturers in South Africa have called on the South African Revenue Service and law enforcement agencies to increase their efforts to prevent criminal networks from selling illicit cigarettes, reports Food for Mzansi.
During June, about ZAR17 million ($1.2 million) worth of illicit cigarettes were destroyed, following the destruction of ZAR30 worth of illicit cigarettes at the Beit Bridge border post earlier in the year. In all, 181 million cigarettes valued at ZAR219 million ($15.1 million) have been seized and destroyed so far this year.
Zacharia Motsumi, spokesperson for the South Africa Tobacco Transformation Alliance, which represents the legal tobacco value chain, said, “We have seen some significant action in recent weeks, but it’s going to take a combined national effort to completely stamp out the illicit traders. We are suffering huge losses because of the illicit cigarette networks, and more action is needed to arrest the perpetrators and destroy their illicit products.
“We need to put a stop to their nefarious activity—it is destroying jobs and also robbing the country of tax revenue. The seizures and confiscations are significant, but they are just the tip of the iceberg. The illicit trade continues to cause massive harm to the economy and punishes farmers, processors and manufacturers who go about their business in a law-abiding way.”
July 19, 2021
Smuggling Prompts Call for Monitoring Officers

Photo: Tobacco Reporter archive
The Fair-Trade Independent Tobacco Association (FITA) has called for stronger monitoring of law enforcement officers following the arrest of members of the South African National Defense Force for allegedly transporting illicit cigarettes.
Two Defense Force members were arrested along with a civilian, who is believed to be an illegal immigrant, while driving an army vehicle full of illicit cigarettes set to be delivered to an unidentified buyer in Musina, according to Eyewitness News.
“As an organization, we have long been vocal about corrupt law enforcement agents and officials at our border posts who play a substantial role in the smuggling of illicit cigarettes via our various border posts,” FITA wrote on its website.
“The latest incident, as shocking as it is, affirms our long-held view that the criminal syndicates behind the rampant smuggling of cigarettes into the country can only succeed with the help of corrupt law enforcement agents.
“We call on the various bodies in our criminal justice system responsible for the investigation, prosecution and adjudication of matters such as this to ensure that justice is administered and that the sovereignty and integrity of this country is protected.
“Incidents of this nature undermine our national security and embolden the criminal syndicates responsible for these acts, which, amongst other things, rob our fiscus of billions.
“We also call on all law enforcement agencies to implement stronger measures to monitor the conduct of their members while on duty. The illicit trade in cigarettes and other goods cannot flourish with the aid of corrupt law enforcement agents. We have of late been encouraged by the great work being done by various law enforcement agencies in rooting out the illicit trade in cigarettes, and we hope that they can rid themselves of these rotten apples who are putting a black mark on all these efforts.”
June 21, 2021
FITA Rejects BAT’s Tax-Evasion Accusations

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The Fair-Trade Independent Tobacco Association (FITA) has rejected accusations of tax evasion against its member companies.
Earlier this week, British American Tobacco South Africa (BATSA) suggested that many of its competitors were selling below the legal minimum collectable tax (MCT) level. According to an IPSOS report commissioned by BATSA, three-quarters of retail outlets in Gauteng, Western Cape and Free State are now openly selling illegal cigarettes.
Many of the brands that sold below MCT level belonged to FITA members, according to the report.
The FITA questioned IPSOS credentials. “This is not BATSA’s first dance with this particular research institution following the much-discredited report released in 2018,” the association wrote.
“Independent researchers and academics have repeatedly voiced their concerns about Big Tobacco and how it should not be trusted in respect of its research and studies on the illicit tobacco trade. They have repeatedly been found to have overstated the size and prevalence of this scourge in order to suit their selfish needs, often to the detriment of their commercial competitors and/or the fiscus.
“These so-called independent reports are now also being used as ammunition by Big Tobacco for anti-competitive purposes to smear the names and brands of independent local cigarette manufacturers.”
FITA insisted its members comply with South Africa’s tobacco laws. The association says it supports an inquiry where warranted, and that authorities should investigate BATSA.
April 13, 2021
‘Tobacco Tax Evasion a ‘National Emergency’

Photo: Tobacco Reporter archive
South Africa’s recent tobacco tax increase has sparked a criminal price war in the country as manufacturers flood the market with untaxed cigarettes, according to British American Tobacco South Africa (BATSA).
A new independent report by IPSOS shows that the announcement of the 8 percent hike in tobacco taxes appears to have been the trigger for an all-out illegal price war in key provinces.
Three-quarters (74 percent) of retail outlets in Gauteng, Western Cape and Free State are now openly selling illegal cigarettes. This is an increase of more than 7 percent on the last survey conducted before the excise increase in February.
The report showed that three-quarters (74 percent) of retail outlets in the three provinces nationwide sold cigarettes below the legal minimum collectible tax (MCT) level. Mystery shoppers were able to purchase illegal cigarettes in every retail sector more easily than during a similar study in February.
Gold Leaf Tobacco Corp. brands found being sold under the MCT rose by 13 percentage points in a month, and 85 percent of their brands purchased were illegal. One hundred percent and 91 percent of brands owned by Afroberg and Carnilinx, respectively, were being sold below MCT in retail outlets where they were the cheapest products available.
BATSA General Manager Johnny Moloto said that the findings of this latest report illustrate a “national emergency.”
The facilitation of this scale of robbery of billions of rand from the people of South Africa as we continue to struggle with pandemic hardships is totally unacceptable.
Johnny Moloto, general manager, BATSA
“We thought that the levels of criminality and tax evasion that cost every single South African huge sums of money could not get any worse. We were wrong,” Moloto said. “This study shows that, now, three out of every four retail outlets in Gauteng, Western Cape and Free State are openly selling illegal products that are not remitting taxes.
“The facilitation of this scale of robbery of billions and billions of rand from the people of South Africa as we continue to struggle with pandemic hardships is totally unacceptable. The robbery is not just getting worse. This study shows that it’s getting worse on a day-by-day basis.
“This is a national emergency, and it’s clear we need an immediate Commission of Inquiry into the tobacco market in South Africa.”
April 12, 2021
BATSA opens first VUSE Inspiration store

Photo: BAT
British American Tobacco South Africa (BATSA) has opened the first VUSE Inspiration store in South Africa in the Canal Walk shopping center in Cape Town.
VUSE Inspiration stores will be opened at 67 existing sites throughout South Africa.
“To date, we have made an extensive investment in bringing Twisp into BATSA’s portfolio, and we plan to invest further in our tobacco harm reduction strategy in South Africa,” said BATSA General Manager Johnny Moloto in a statement. “We will be expanding our number of kiosks, investing in bringing our new products to market and enhancing the skills of our BAT team.”
Another 15 new sites in key locations will be added to the VUSE network by December as part of a significant expenditure project.
“The opening of our first flagship VUSE Inspiration store in South Africa is an important milestone in delivering on our harm reduction strategy and our investment in science and innovation to demonstrate the potential of our extended portfolio of products,” said Moloto.
March 29, 2021
BATSA Calls for Inquiry Into Illicit Trade

Photo: Tobacco Reporter archive
British American Tobacco South Africa (BATSA) is calling for an urgent inquiry into the country’s booming illicit cigarette market.
In some provinces, three out of every four retail outlets are selling a pack of 20 cigarettes below the minimum collectible tax rate (MCT) of ZAR20.01 ($1.30), according to a recent study by Ipsos.
The market research company found brands registered to Gold Leaf Tobacco Corp. to comprise half of all products selling below the MCT. Brands registered to Carnilinx were the next most prevalent, being identified as the cheapest brands on sale in 16 percent of the nationally representative sample of retailers visited, with 48 percent of these selling Carnilinx brands at below the MCT.
“These results are outrageous,” said BATSA general manager Johnny Moloto in a statement. “Even allowing for some of these purchases being stolen, smuggled or counterfeit stock, the sheer volume and range of brands available suggests that some manufacturers must be complicit in the sale of these products—whether through omission or active facilitation. There is no other plausible explanation.”
These results are outrageous.
Johnny Moloto
“South Africa urgently needs an uncompromising, comprehensive investigation into all players in the industry,” Moloto said. “We need a Commission of Inquiry as well as rapid enforcement by SAPS and SARS.”
March 9, 2021
South Africa: Cigarette Ban ‘Successful’

Photo: Heinrich Botha from Pixabay
A recent study shows that South Africa’s cigarette ban in 2020 helped reduce the number of lung disease-related emergency room visits, reports Herald Live.
South Africa banned tobacco sales from March to August 2020 to help prevent the spread of the coronavirus. In December, the country’s High Court ruled that the measure was unconstitutional. The government is appealing the judgment.
Published in the African Journal of Primary Health Care & Family Medicine, the study showed that emergency center visits for chronic obstructive pulmonary disease (COPD) at the George Regional Hospital in the Western Cape fell by 69.28 percent between January and August 2020 compared with the same period in 2019.
Whilst the tobacco sales ban has had detrimental effects on economy, one of the benefits has been a reduction in emergency center attendance of patients with COPD exacerbations compared with that during the same period from the previous year.
“This notable reduction in COPD presentations reduced service pressure of emergency center and most likely benefited patients’ health,” the study states. “Whilst the tobacco sales ban has had detrimental effects on economy, one of the benefits has been a reduction in emergency center attendance of patients with COPD exacerbations compared with that during the same period from the previous year. Further research and policies are needed to ensure ongoing reduction in the prevalence of smoking.”
According to the study, only 9 percent of smokers quit during the lockdown.
An online survey of smokers found that 93 percent maintained their habit by paying up to 250 percent more for illicit products.
South Africa, Botswana and India implemented smoking bans as part of their Covid-19 restrictions. India’s ban lasted six weeks, Botswana’s ban lasted 12 weeks and South Africa’s ban lasted five months.
March 9, 2021
Minister May Appeal Tobacco Ban Ruling

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The Western Cape High Court has granted South African Minister Nkosazana Dlamini-Zuma permission to appeal the ruling that last year’s lockdown ban on tobacco sales was unconstitutional and invalid.
However, the court indicated that the minister’s prospects of success are slim in terms of the applicants’ constitutional law arguments.
From March to August 2020, the government prohibited sales of tobacco products and alcohol to help stem the spread of the coronavirus. Market leader British American Tobacco South Africa (BATSA) and smaller companies united in the Fair-Trade Independent Tobacco Association (FITA) challenged the ban, arguing that a short-term ban on a product whose health risks become evident only in the long run makes no sense.
They also questioned the rationale of the argument around cigarette sharing. Tobacco shortages and high prices of black market cigarettes would only increase the likelihood of smokers sharing their “stompies,” the tobacco companies said.
The government lifted the ban before the matter had been heard in court, but BATSA decided to proceed with the court action to prevent the ban from being reintroduced at a later stage of the pandemic.
On Dec. 11, the High Court ruled that South Africa’s ban on tobacco sales during the country’s hard lockdown earlier this year was unconstitutional.
“BATSA and our nine co-applicants had a resounding success in December with a strong judgment delivered in our favor,” said Johnny Moloto, the general manager of BATSA, in a statement. “Based on the strength of the High Court’s findings, we are confident that the Supreme Court of Appeal will uphold the Western Cape’s judgment and rule in our favor.”
BATSA said that, instead of taking futile challenges to the Supreme Court, the government should immediately ratify the global Illicit Trade Protocol that has been sitting on its desk for close to a decade and roll out a compliant tobacco track-and-trace system.
“Despite our confidence in the success of our case, we think the government would be wiser allocating its resources to combating the illicit trade in cigarettes, which was fortified by the ban and is now running rampant across South Africa,” said Moloto.
In a press note, BATSA said it supports a recent call by the FITA and the South African Tobacco Organization for an investigation into the illegal trade in cigarettes.
“This is an issue of utmost national importance that is taking huge sums out of the pockets of South Africans and putting it in to the pockets of criminals every single day. It deserves a fully resourced investigation or Commission of Inquiry with real powers,” said Moloto.
BATSA expects the investigation to pay for itself by identifying the culprits behind the illegal trade, prosecuting them and shutting down the illegal market to return billions in lost taxes to South African citizens.
March 2, 2021