#ThePresidentsKeepers: A taxing time for Zuma
Durban - President Jacob Zuma could face impeachment and criminal charges for tax evasion if he is found guilty of allegations that he did not disclose fringe benefits accrued through the development at Nkandla, and of drawing a R1 million-a-month salary from a Durban security company.
These were among the damning allegations in Jacques Pauw’s recently published book, The President’s Keepers, in which the author alleged that Zuma had not submitted tax returns, nor declared his Nkandla fringe benefits to the SA Revenue Service, and that he had received a R1 million-a-month salary from Durban-based Royal Security, founded by Roy Moodley, during the first four months of his office as president.
Pauw has alleged that this made Moodley his “boss” while he was president and that according to a source, pay-as-you-earn (PAYE) tax of R400 000 a month was initially not deducted from the income Zuma had received, but that Moodley eventually paid Sars via a bank transfer.
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The close relationship between Zuma and Moodley dates back several years.
Moodley came under intense media scrutiny in 2009, when he was arrested for allegedly attempting to bribe an official with R100 to get a “better seat” at Zuma’s inauguration in Pretoria.
However, the charge was withdrawn and both the National Prosecuting Authority and Moodley said the matter had been a misunderstanding and that he had merely offered the official a tip for good service.
Moodley was also at Zuma’s side in 2010, when the president won R16 000 after he bet on the winning horse at the Durban July.
In more recent years, Zuma appeared as the guest speaker at Moodley’s 60th birthday party at the ICC in 2014 when he referred to Moodley as his “comrade and friend”.
The Mercury also reported in 2013 that Zuma’s son, Edward, had stayed at a Durban North home owned by the Roy Moodley Trust.
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Constitutional law expert and scholar at UCT’s law faculty, Professor Pierre de Vos, said it was a breach of the constitution and of the executive members' code for any member of the cabinet to undertake additional paid work while in office.
“Section 96 of the constitution says that you can’t as a cabinet member undertake any other paid work, or you cannot act in a way that exposes you to a conflict of interest,” De Vos said.
“In terms of the act, if the president took money and there was an understanding that he would do favours in return, then he would be guilty of corruption in breach of the Prevention and Combating of Corrupt Activities Act, which we don’t know if it is so,” he said.
De Vos said this would be an impeachable and criminal offence, with a minimum sentence of 15 years in jail.
Tax law expert and partner at Webber Wentzel, Joon Chong, said the president was required, as with any taxpayer, to pay PAYE on his salary and to declare all benefits in kind and fringe benefits, such as the improvements at Nkandla.
“This amounts to taxable benefits in terms of the seventh schedule of the income tax act. On the basis he is paying PAYE, they should be included in his income and PAYE should be paid on the accommodation and any other benefits he gets such as credit cards, petrol, and political favours,” she said.
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Chong said the government department that paid the president’s salary, as his employer, was liable to ensure that PAYE was withheld, which meant that, as the president, this was interchangeable and he could be held accountable as employer for ensuring this was done.
Chong said the penalties for understating tax liability were up to 200% plus interest on the outstanding amount. She said that for a taxpayer to repeatedly not submit nor to intend to submit tax returns amounted to non-compliance on an “extraordinary scale”. She said in such cases Sars would repeatedly request tax returns from the taxpayer, but if these were not forthcoming after a period, the taxman had the power to conduct an audit and create an estimated assessment using third-party information and to impose penalties based on it.
The president’s spokesperson, Bongani Ngqulunga, and Moodley could not be reached for comment on Wednesday.
Sars spokesperson Sandile Memela declined to respond to a question on whether the taxman was investigating Zuma’s tax affairs with a view to charging him legally for alleged non-compliance and tax evasion.
“We are consulting with legal counsel on the matter and are not in a position to comment at this stage. Section 69 of the Tax Administration Act 2011 does not allow Sars to divulge or discuss any taxpayer's affair,” he said.