Read more
Rooting out the rot: Sars’ 2021 scorecard in the fight against crime
This year saw an increasing of convictions, mainly in offences committed under Customs and Excise, Vat and pay-as-you-earn tax.
A Customs official about to destroy illegal cigarettes during a media event at Lehae La SARS in Brooklyn, Pretoria, 22 June 2021. The event was to showcase the work by Customs in intecepting and destroying illegal/illicit cigarettes which causes the country to lose lots of tax revenue. They also showcased some of their other work. Picture: citizen.co.za/Neil McCartney
South African Revenue Service (Sars) Commissioner Edward Kieswetter has stayed true to his commitment to convicting and sentencing tax criminals.
This year has seen a steadily increasing rate of convictions, mainly in offences committed under Customs and Excise, value-added tax (Vat) and pay-as-you-earn (PAYE) tax.
Customs officers in particular have notched up impressive busts involving illicit cigarettes, and imports of rhino horn and drugs.
Sars’s investigating team cooperated with the National Prosecuting Authority (NPA) to secure a conviction and sentencing of former Oakbay director DP Naik for cigarette smuggling.
The various offences and the outcomes for the year, per Sars’s press briefings, are detailed below.
Non-compliant PPE companies
According to Sars, 52 non-compliant companies received R1 billion in contracts for the supply of personal protective equipment (PPE) and Covid-19 related services:
- 11 companies have been convicted;
- seven cases are currently on the court roll;
- 29 are with the NPA;
- Five case dockets are being processed by the Hawks;
- R170 million in unpaid taxes has been recovered;
- R500 million in assets (including cash) is under preservation orders;
- 33 entities are linked to politically exposed persons.
Several companies (not named) that received government tenders totalling R50 million for Covid-19 related services (decontamination and deep cleansing of schools) were sentenced (no details given) for not registering for Vat.
The companies were awarded tenders by the Gauteng Department of Education. Another company was awarded a tender by the KwaZulu-Natal Department of Social Development for provision of hygiene equipment and consumables.
According to Sars: “The companies were convicted and sentenced in the Durban District Court … The sentences range from five months to ten months imprisonment (with the option of a fine)”. R41 million in assets and cash was seized.
“Sars has a keen interest in mismatched income and expenditure and incongruent cash flows.”
Sars has not released the names of the individuals or the companies.
Collaboration with other organisations
In July 2021 Sars issued a press release announcing that it had joined forces with the IRS Criminal Investigation to fight international crimes.
IRS-CI delivered an offshore tax evasion training webinar to approximately 40 Sars enforcement officers that incorporated “transnational financial crimes specific to offshore banking schemes, tax evasion, and conspiracy”.
Moneyweb asked Sars to provide an update on this collaboration, and whether this collaboration has resulted in any convictions. Sars has not responded.
Sars and the National Directorate for Public Prosecution issued a joint statement that they will collaborate and “deal with key challenges of tax crime and non-compliance, eroding the tax revenue base and the integrity of the tax system”.
The immediate focus will be employers not paying over PAYE, not filing returns, “as well as other general corrupt activities”.
Moneyweb asked Sars if tax evasion (such as not declaring illicit proceeds to Sars, and the tenderpreneurs who have not registered for tax or declared any income) will be prioritised in 2022.
Sars has not responded.
By Barbara Curson
This article first appeared on Moneyweb and was republished with permission. Read the original article here.
