President Jacob Zuma. File Image: IOL
President Jacob Zuma. File Image: IOL

Zuma's alleged plot to squash R63 million tax bill

By Staff Reporter Time of article published Oct 30, 2017

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JOHANNESBURG - In a sensational new book titled The President's Keepers that hit shelves last week, investigative journalist Jauques Pauw delves into what he calls a "network of shady characters who keep Zuma in power." 

The book also contains startling "revelations" of Jacob Zuma's ex-wife and ANC presidential candidate Nkosazana Dlamini-Zuma.

In his book, Pauw alleges that Zuma failed to submit his tax returns during the first five years of his presidency. 

"Once Jacob Zuma ascended to the highest office on 6 May 2009, one hoped he would change his ways and obey the laws of the land. He didn't, and failed to submit a tax return for his first year in office. This was no exception. He didn't submit a tax return for the second year, either. Or the third or the fourth," Pauw writes. 

Pauw further describes how Zuma legally owes millions of rands in tax on the fringe benefits that accrued to him due to the 2009 Nkandla upgrades. As the extent of the upgrades became more apparent in 2012, the tax effects on Zuma became equally clear. 

"Fringe benefits must be declared by taxpayers, who are then taxed on these annually as a matter of course by SARS. According to the seventh schedule of the Income Tax Act, there is no doubt that Zuma owed SARS for the benefits he derived from the upgrades to Nkandla. Whether the upgrades were security-related or not is irrelevant. The fact remains that he received significant fringe benefits. Tax law determines that tax is owed whether such benefit is "voluntary or otherwise."

Pauw detailed how the South-African revenue service (SARS) determined that Zuma was probably liable for taxable fringe benefits of around R145,185,235 relating to the upgrades, with taxation of the amount at a rate of 40% being R58,074,094.

"Because Zuma hadn't declared these fringe benefits, a penalty of 10% - amounting to R5,807,409 - would have to be added, plus additional interest. This alone would have brought his tax bill for Nkandla to R63,881,503."

By October 2013, SARS had completed its preliminary inquiries into the upgrades and other aspects of Zuma's non-compliance with tax laws.

"The file was kept with the VIP Taxpayer Unit, which deals with the taxes of prominent politicians, cabinet ministers and top civil servants, and locked away while SARS waited for Zuma's tax submissions." 

Pauw claims that Jacob Zuma's legal adviser Micheal Hulley had promised that Zuma would submit his returns but didn't. "SARS, mainly through [SARS goup executive] Kingon, kept on nagging Hulley to comply, but Hulley just kept on giving SARS the runaround." Pauw claims that his sources confirmed to him that as of May 2015, the President had still not submitted his returns.

Responding to the allegations on Sunday, Presidency spokesperson, Dr Bongani Ngqulunga said, "the Presidency rejects the allegations contained in media reports today‚ 29 October 2017‚ claiming wrongdoing by President Jacob Zuma in relation to some undeclared funds‚” 

He further said that the President had declared to the relevant authorities all income received.

“Allegations contained in the reports are misleading and are clearly part of the ongoing smear campaigns. The tax matters of the President are in order‚” he said.


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