Pretoria, Tuesday, 14 May 2019 – Two former SARS Customs auditors were sentenced to three years direct imprisonment for corruption in Durban last week, 9 May 2019.

Pranesh Maharaj from La Mercy and Reuben Moodley from Newlands West were both caught red-handed with a cash bribe of R100 000 in a brown paper envelope in their pockets in a police operation in March 2018.

The two auditors acknowledged that they had issued a notice to a well-known KwaZulu-Natal businessman in February 2018, advising him of an imminent audit of companies where he was a director. During a follow-up meeting, they solicited a bribe of R200 000 from him “to make his tax problems disappear”.

Later the same day, Maharaj contacted the businessman, asking for an advance payment of R10 000, which was duly paid. Maharaj did not inform Moodley of this arrangement, nor shared the money with him.

The businessman, however, reported the matter to the police. A decision was taken to set up a police trap in terms of section 252A of the Criminal Procedures Act. The businessman provided the cash, which was divided into two envelopes, each containing R100 000.

The Police pounced on the accused as they were walking away, after the businessman handed them the envelopes in the parking lot of the Standard Bank, Kingsmead Branch on 2 March 2018, as was arranged between them.

The Durban Regional Court also sentenced the two auditors an additional two years imprisonment, conditionally suspended for five years. Maharaj offered to repay the R10 000 that was paid to him by the taxpayer.

Both employees resigned during a SARS disciplinary process on in August 2018.

SARS Commissioner Edward Kieswetter welcomed the sentence, adding that there is no place for dishonest employees at SARS.

“We have a zero tolerance for dishonesty and unlawfulness. As we forge ahead on a path of restoring a culture of integrity and service excellence in our institution, we would like to assure citizens that SARS will take harsh measures against employees who betray the public trust,” he said.

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Pretoria, Tuesday, 30 April 2019 – The South African Revenue Service (SARS) has embarked on a number of strategic initiatives to curb revenue leakages emanating from illegal and unethical practices in the illicit economy.

The illicit economy ranges from an underground economy, which operates outside the rules and regulations of the country, to organised crime, and includes the illicit trade of products. 

South Africa experiences significant losses in Excise revenue due to a global increase in the manufacturing, supply and sale of illicit excisable products. In response to this challenge, SARS has embarked on a process to mitigate such illicit and non-compliant activities by means of improved policy, enhanced processes and the use of advanced technology to uniquely mark products, in order to strengthen the enforcement environment and ensure overall control of the supply chain.

SARS is looking to introduce the track-and-trace marker technology in the cigarette industry, which will enable the organisation to monitor the journey from cigarette manufacturing plants to points of sale and/or import or export trades.  This non-intrusive technological innovation is expected to boost the monitoring and control of duties and taxes in this industry significantly.

A tender for the provision of a Production Management and a Track and Trace solution for cigarettes has been published on the SARS Website.

The reconstituted Illicit Economy Unit at SARS has hit the road running with a number of impactful enforcement activities already in the public domain, whilst continuing with other new and historic investigations in the Enforcement domain.

Enquiries: Contact sarsmedia@sars.gov.za or Sandile Memela at 082 8003750.

This will effectively create a single platform for the two institutions to engage each other on matters of mutual interest without conflicting their respective mandates, particularly on corporate and operational issues.

The areas of agreement emphasize collaborating in a professional manner to uphold the independence and autonomy of each institution. 

Importantly, this must be consistent with the principles enunciated in the Tax Administration Act.

This marks an important breakthrough for both institutions to commit to a relationship based on consultation, mutual support and co-operation when it comes to disclosing information, training, secondment of staff and general mutual co-operation and assistance.

Tax Ombud Judge Bernard Ngoepe welcomed the signing of the MoU describing it as a step in the right direction. He added that he hoped it would bring an end to the undue delays in the finalisation of taxpayers’ complaints. “The signed MoU does not mean we will not diligently deal with taxpayers complaints against SARS. We remain an independent institution and will continue to execute our mandate fairly and impartially. We are committed to maintaining a balance between SARS’s powers and duties, on the one hand, and taxpayers’ rights and obligations, on the other,” said Judge Ngoepe. The Judge further stated that he was “confident that it (MoU) will benefit taxpayers and strengthen both institutions in the execution of their respective mandates.”

In the unlikely event that there are specific issues that are not addressed within the agreement, separate service level agreements may be negotiated when necessary.

However, if an agreement cannot be reached, then the parties will consult the Minister of Finance, whose decision on the matter will be final. 

SARS accepts that the Tax Ombud’s mandate is to review and address any complaint that concerns a service failure or a procedural or administrative matter arising from the unfair application of a tax Act and the Customs & Excise Act by SARS. 

It is noteworthy that the Tax Ombud may only review a request if the requestor has exhausted the available complaints resolution mechanism in SARS, unless there are compelling circumstances for not doing so.

However, the OTO may not review the following: 

• Legislation or tax policy
• SARS’ policy or practice generally prevailing,  other than to the extent that it relates to a service matter, or a procedural or administrative matter arising from the application of the provisions of a tax Act by SARS
• A matter subject to objection or appeal, except for an administrative matter relating to such objection and appeal; or
• A decision of, proceeding in, or matter before a tax court.

Furthermore, the proceedings and mandate of the Tax Ombud may be further prescribed by regulations made by the Finance Minister.

SARS believes that an independent and objective review of complaints can improve taxpayer education and SARS’ understanding of taxpayers’ issues. It will provide a view of taxpayers’ issues from a different perspective and interpretation of the law.

Thus SARS Commissioner and the Tax Ombud agreed on collaborating when the OTO requested information on areas of mutual interest, including access to SARS’ officials who will be available to assist the OTO in relation to information systems, human resources, finance and procurement, executive support, and access to SARS’ training facilities.

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Pretoria, 18 April 2019 – The South African Revenue Service (SARS) has released its latest consolidated Customs busts statistics from 01 April 2018 to 31 March 2019. The total value of all goods confiscated amounted to R3 694 742 928.

Some of the statistics include:

• Narcotics: 892 busts valued at R535 132 535
• Cigarettes: 220 busts valued at R50 252 520
• CITES (including endangered species such as abalone): 43 busts valued at R 42 224 372
• Currency: 14 busts valued at R64 986 630
• Viagra / Viagra Generics: 170 busts valued at R69 280 100
• Counterfeit clothing, footwear and other goods:  1 526 busts valued at R2 710 118 775
• Clothing and Textiles (second hand and other infringements):  407 busts valued at R7 988 166
• Alcohol: 298 busts valued at R18 430 752  

Compared with the same period during the previous financial year (April 2017 to March 2018), the number of busts has increased to 6 828 from 4 840, and the value of the busts has increased to R3 694 742 928 from R2 461 425 369.

“Acting Chief Officer: Beyers Theron continues to commend Customs officers for ensuring that South Africa’s ports of entry remain closed to illicit goods. Also travellers, particularly in this time period, are encouraged to familiarise themselves by visiting www.sars.gov.za with what goods are allowed or not so as to ease their travel into and out of the country.”

• Some of the high-profile busts which took place during the last year include the following:
• Cannabis Oil, with an estimated value of R300 000 000, en route from Canada to South Africa, was seized at Durban Harbour on 07 January 2019.
• Acetanthranil (mandrax precursor), with an estimated value of R45 000 000, en route from Hong Kong to South Africa, was seized at OR Tambo International Airport on 17 December 2018
• Acetanthranil (mandrax precursor), with an estimated value of R43 000 000, en route from Hong Kong to South Africa, was seized at OR Tambo International Airport on 17 December 2018
• Sexual Enhancement Tablets (Generic Viagra) valued at R30 000 000, en route from India to South Africa, were seized at OR Tambo International Airport on 13 May 2018
• Sexual Enhancement Tablets (Generic Viagra) valued at R24 192 000, en route from India to South Africa, were seized at OR Tambo International Airport on 13 December 2018
• Sexual Enhancement Tablets (Generic Viagra) valued at R4 400 000, en route from Hong Kong to South Africa, were seized at OR Tambo International Airport on 30 December 2018
• Shark Fins, with an estimated value of R7 200 000, en route from Brazil via South Africa to Hong Kong, was seized at OR Tambo International Airport on 04 March 2019
• Abalone, with an estimated value of R8 960 000, en route from Cape Town to Johannesburg, was seized at City Deep on 15 February 2019
• Rhino Horn, with an estimated value of R23 200 000, en route from South Africa to Dubai, was seized at OR Tambo International Airport on 09 January 2019
• Currency (USD) equivalent to R9 460 500, en route from South Africa to Hong Kong, was seized at OR Tambo International Airport on 11 September 2018
• Currency (USD) equivalent to R13 798 882, en route from South Africa to Dubai, was seized at OR Tambo International Airport on 25 February 2019
• Currency (USD) equivalent to R14 298 360, en route from Angola via South Africa and Dubai to China, was seized at OR Tambo International Airport on 30 December 2018
• 1 766 200 Cigarettes were seized at Beit Bridge Border Post on 17 April 2018
• 2 869 480 Cigarettes were seized at Beit Bridge Border Post on 27  March 2019
• 5 012 040 Cigarettes were seized at Beit Bridge Border Post on 24 November 2018

Pretoria, Monday 1 April 2019 –  For the financial year ending 31 March 2019, SARS collected an amount of R1 287.6 billion, against the 2019 Budget estimate of R1 302.2 billion resulting in a deficit of R14.6 billion (-1.1%).

It should be noted that these are preliminary results, which will be subject to detailed financial reconciliation and a final audit.

The gross amount collected is R1 575.4 billion which was offset by refunds of R287.8 billion, resulting in net collections of R1 287.6 billion. The net revenue outcome of R1 287.6 billion represents a growth of R71.2 billion (5.8%) compared to the 2017/18 financial year.

Seen against the 2019 Budget estimate of R1 345.0 billion, this results in a deficit of R 57.4 billion  (-4.3%), and against the Revised Estimate of R1 302.2 billion, this results in a deficit of R14.6 billion   (-1.1%).

Gross collections grew by 8.6% whilst refunds recorded strong growth of 22.7% following the announcement by the Minister of Finance during the Medium Term Budget Policy Statement (MTBPS) that the VAT refund envelope would be increased to allow the release of VAT refunds from the fiscus back into the economy.
During the reporting period, global economic growth weakened to 3.7% for 2018 and a projected growth of 3.5% in 2019. Growth has been hamstrung by US-China trade tensions (and tariff increases) in 2018, the introduction of new automobile fuel emission standards in Germany, the contraction in domestic demand in Italy due to concerns over sovereign and financial risks, as well as weak financial market sentiment and growth in Turkey.

Measured in real GDP terms, the domestic economy grew by 0.8% in 2018 from 1.4% in 2017. The major contributors to the 0.8% growth rate in 2018 were finance (0.4 of a percentage point based on growth of 1.8%) and government (0.2 of a percentage point based on growth of 1.3%). On the contrary, agriculture (-4.7% and -0.1 of a percentage point), mining (-1.7% and -0.1 of a percentage point), and construction (-1.2% and -0.0 of a percentage point) contributed negatively to GDP growth in 2018.

The main sources of revenue that contributed to the R1 287.6 billion collected were Personal Income Tax (PIT), which contributed R493.8 billion (38.3%), Value-Added Tax (VAT) contributing R324.6 billion (25.2%), Company Income Tax (CIT), which contributed R214.7 billion (16.7%) and Customs duties contributed R55.2 billion (4.3%).

• Pay-A-You-Earn (PAYE) collections for the year grew by 7.0% to R477.4bn, despite significant job losses, moderation in wage settlements and contraction in bonus pay-outs. However, this growth was dampened by lower share option pay-outs mainly from the finance sector, moderate public sector annual increases, job losses in the formal non-agricultural sector and lower bonus pay outs in the finance sector.
• There was double digit growth in Domestic Value-Added Tax (VAT) since May 2019 due to the benefits of the 1 percentage point increase in the VAT rate. This resulted in strong growth rates in both the large business and SMME segments of 9.8% and 14.8% respectively. For vendors who paid in both years for the relevant periods, Domestic VAT would have grown by 3.9% if there was no VAT rate increase, compared to 11.2% for that sample with the rate hike.  That is why significant growth was achieved despite weak growth in retail trade sales, which continue to be under pressure. Full year collections yielded R378.8bn of which 83.0% was received via the eFiling system.
• Company Income Tax (CIT) collections contracted by 2.5%,  the contraction is on the back of a significant number of CIT refunds which were paid to the large business segment and relate to multiple periods that were under audit review, as well as the continued efforts to clear the IT credit book. Furthermore, the continuing power cuts imposed by the utility company also contributed to the decline as business activities and company operations were severely affected thus affecting their profitability.
• Growth in Personal Income Tax (PIT) provisional tax payments slowed from 37.5% in August 2018 to 18.4% in February 2019, mainly due to the non-repeat and / or lower declaration of capital gains compared to the previous year.
• There was strong growth in import taxes of 14.0% for the first three fiscal quarters, after which transactional data and merchandise imports did not meet expectations during some months of the final fiscal quarter. Payments that are part of the 13th deferment statement exceeded all expectations which resulted in the overall outcome for Customs growing at 13.9% which is marginally above the required growth rate.

As announced at the Medium Term Budget Policy Statement (MTBPS) in October, the requisite fiscal space was created for SARS to reduce the credit book on VAT refunds. SARS reduced the credit book on VAT refunds from R41.8 billion in September 2018 to R25 billion by the end of the financial year, resulting in a 16.4% increase in value and 6.3% in the volume of refunds going back into the economy. Following the announcement, we see gross collections growing at 8.6% while refunds grew by 22.7%.

In aggregate SARS paid out R287.8 billion in refunds in the 2018/19 financial year. A total of R30.5 billion was paid in PIT refunds, reflecting a 13.8% increase on the previous year. CIT refunds totalled R22.2 billion, representing about R8.7 billion (63.7%) increase in pay-outs compared to prior year. VAT Refunds for the year totalled R229.2 billion, exceeding the estimate by R1.2 billion, reflecting an increase of R38.1 billion (19.9%) on the previous year. Growth was driven by the R15.8bn (19.9%) increase in payments to the small and medium vendors, while large vendors received R22.3bn (20.0%) more refunds than in the previous year.

There was also an increase in diesel refunds of R2.8 billion (93.3%) compared to the previous year, due to the increased reliance on diesel for electricity generation.

Although the higher refund payments lowered the net revenue collection for the year, it also puts money back into the economy.

For more information please refer to the Acting Commissioner’s Speech, the PowerPoint presentation and infographics (scroll down). These will also become available on this website under Media>Media Packs.

 

 

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