Commissioner of the SA Revenue Service (Sars) Edward Kieswetter is making good on his promise to track down tax crimes.
In the Sars 2023 annual report, he said: “Customs valuation fraud, excise under-declaration and syndicated tax crimes, including illicit activities and interventions linked to cases relating to state capture, remain major focus areas.”
For the year ending 31 March, 2023, Sars raised assessments to the value of R4 billion and recovered R6.7 billion from syndicated tax and customs crime investigations.
There were 1 187 illicit trade interventions, 793 detentions and 173 seizures.
Regarding criminal investigations, there were 141 convictions, 11 cases resulted in custodial sentences totalling 87.5 years’ direct imprisonment and 248 cases were handed to the National Prosecuting Authority.
The report includes details of Sars’ efforts to enhance its criminal enforcement actions.
This includes lawfully exchanging taxpayer information with the Financial Intelligence Centre (FIC), the law enforcement agencies, the South African Reserve Bank (Sarb) and the auditor-general.
Sars has signed memorandums of understanding with the Directorate for Priority Crime Investigation and the Financial Intelligence Centre (FIC) and will improve information exchange with the Sarb.
Sars and the Organisation for Economic Cooperation and Development hosted a workshop attended by law enforcement agencies, National Treasury, Sars, the FIC, Financial Sector Conduct Authority and the SA Reserve Bank to “set the benchmark for inter-agency cooperation in combating illicit financial flows, money laundering, tax crimes and corruption”.
Sars facilitates information exchanges, including requests for information pertaining to entities from Sars business units, external law enforcement and regulatory agencies and commissions of inquiry.
Certain matters are referred to Sars business units for further investigations, such as referrals stemming from reports received from the FIC.
Other referrals emanate from the Special Investigating Unit, Independent Regulatory Board for Auditors, the Sarb and the SA Police Service.
Sars “maintains a database of all information received and exchanged with law enforcement agencies and commissions of inquiry (COI) to link noncompliant taxpayers and traders involved in unlawful activities and illicit financial flows. This is to achieve a holistic view and establish links between the information and parties identified by the COIs”.
The database includes “indicators that may point to a possible risk of tax noncompliance” such as “government payments received, properties and vehicles owned, assets owned, company directorships, links to active companies, tax debt and suspicious activity reports”.
Sars is responding to the FATF review outcomes, including the rolling out of the electronic traveller declaration system; implementing new beneficial ownership and transparency information requirements for trusts and companies; and amending the corporate income tax return to require all companies to declare legal ownership information.
In August 2022, Sars introduced a new legislative tool targeting unexplained wealth.