Thursday, 15 November 2018 – Between April and September this year, SARS has achieved 30 successful convictions in Value-Added Tax (VAT) – and Personal Income Tax (PIT) fraud cases, involving R65 million*. This represents a 100% success rate in convictions relating to the fraud cases that were investigated by SARS criminal investigators and finalised by the courts during this time, Ms Mogola Makola, Chief Officer of Enforcement, revealed. In total, the courts finalised 74 cases during this time, which represents the first six months of SARS’ 2018-2019 financial year. The cases related to charges of bribery, fraud and theft and contravention of the Income Tax Act, VAT Act and Customs & Excise Act.
* Erratum: SARS incorrectly stated that an amount of R65 billion was involved in the 30 successful convictions of VAT and Pit fraud cases. The correct amount is R65 million. SARS sincerely apologises for this error.
Increase in convictions in VAT fraud: fictitious entities and fictitious invoices
Within our own backyard, SARS follows an emphatic zero tolerance approach to fraud and corruption, Ms Mokola notes. “SARS officials, without fear or favour, are duly reported to the South African Police Service (SAPS) and dismissed for fraudulent or corrupt activities when found guilty.”
Compared to the first six months of the previous financial year, there has been a sharp increase in the number of employees who have been sanctioned, dismissed or resigned following investigations by the Fraud Investigations Unit. So far this year, SARS has sanctioned 51 employees and dismissed 9 while 31 have resigned in connection with suspected fraudulent activities.
This is mainly due to a sharp increase in resignations (31 for the first six months of this year, vs 13 for the whole of last year). In this regard, we have noticed an increase in unauthorised interference in taxpayer matters, which have increased by 40% to 11 resignations, up from 2 during the previous year. There has also been a significant increase in resignations related to investigations into abuse of Customs & Excise processes: from 5 in 2017, to 10 in 2018. Customs fraud and corruption remain the biggest internal risk for SARS, she said.
“A positive developing trend is the significant increase in the reporting of suspected criminal activities by SARS employees. Between April and September this year, employees reported 158 or 89% of all cases, compared to only 94 cases reported during the comparative time last year.
“While I believe this is indicative of a desire amongst employees with integrity to rebuild trust in the organisation, it may also indicate that external parties are not using our economic crimes reporting channels to their full potential. In this regard we wish to appeal to the public to report suspected criminal activities of staff members and external parties alike,” Makola said.
She appealed to members of the public to please report suspicious activities by phoning the SARS Anti-Corruption Line on 0800002870, or via the SARS website under Report Tax Crime.
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