Sars sets up key teams to unlock illicit SA economy

By Kabelo Khumalo Time of article published Jul 3, 2018

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JOHANNESBURG - The South African Revenue Service (Sars) is rolling back ill-fated decisions taken under embattled Tom Moyane’s leadership, reintroducing key teams to tackle the illicit economy, as it seeks to meet the R1.345 trillion tax collection target. 

Sars said yesterday that it would reconfigure the units to focus on contraband cigarettes, abalone poaching, illicit gold, fuel trade and organised crime, among others. It, however, admitted that the process to bring back the units would be difficult, as some of the experienced investigators that had headed them in the past were now scattered throughout its operations and some had left the revenue services. 

Acting commissioner Mark Kingon said Mogola Makola, the chief officer of enforcement at the revenue service, was busy “reconstituting” teams that tackled illicit activities. 

“The chief officer of enforcement (Makola) has been co-ordinating teams in designing a process going forward to reconstitute teams to deal with the broader illicit economy. We are finding ways of reconstituting teams using the due processes of the organisation,” Kingon said. “The illicit economy needs a specific type of tax man, who is able to focus and dig deep into illicit activities.”

Last week, former Sars head of tax and customs enforcement Gene Ravele told the Nugent commission of inquiry into the affairs of the revenue service that the inspection of cigarette companies was abruptly halted by former Sars executive Jonas Makwakwa. Ravele said the decision to stop such crucial inspections had bred grounds for non compliance with excise taxes. Senior tax consultant at Mazars Tertius Troost said specialised teams ensured that all trade was performed on a formal basis and all persons paid their fair share of taxes that are due.

Finance Minister Nhlanhla Nene. Picture: Leon Lestrade/ANA
This, in turn, creates a larger black market and underground economy, which can influence our entire society. 

“There is a view that more oversight is required in the informal economy, where it is perceived that a large amount of tax leakage is taking place,” said Troost. According to the Tobacco Institute of Southern Africa, illicit trade in tobacco places between 8 000 to 10 000 jobs on farms alone and directly dependent on the sector at risk. 

The organisation put the financial cost to the fiscus alone at least R5 billion a year – a figure that equates to 10 percent of the estimated national budget shortfall of R50bn. Finance Minister Nhlanhla Nene said it was important that Sars moved to restore its credibility. “There can be no mission more important than stabilising and restoring Sars into an institution that is credible in the eyes of the South African public. “We want Sars to do its work without fear, favour or prejudice, and to do so optimally,” Nene said. Sars yesterday officially opened the tax season and unveiled its new Service Charter, which spells out what the public can expect from the organisation.

The last charter was published under Public Enterprises Minister Pravin Gordhan during his tenure as Sars commissioner in 2007. Kingon said the revenue service was finding con-compliance on a grand scale across VAT, pay as you earn and income tax. “We get taxpayers with outstanding returns for 37 months who are prepared to pay the penalty and not submit a tax return. One wonders what people are hiding.” Meanwhile, more dirt from Sars was expected to be dished out in the coming weeks after Judge Robert Nugent, who chairs the inquiry into governance into Sars, threw out Moyane’s application to halt proceedings, pending his disciplinary hearing. 

In a scathing ruling yesterday, Nugent described Moyane’s application to stop the commission’s proceedings as a disgrace, abusive, invective and sinister. He said the inquiry would go ahead as it was established by a presidential proclamation. “The commission is capable of carrying on its work, for a time, without covering ground that might be covered by the disciplinary inquiry. Lest if the work is prejudiced, I do not intend to do so at this stage,” said Nugent. 


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