Tshwane, 8 October 2021 – The South African Revenue Service (SARS) has recently been focussing on 52 non-compliant companies that received R1-billion in contracts for the supply of personal protective equipment (PPE) and other Covid-19 related services.
To date, 11 companies have been convicted, 7 cases are currently on the court roll, 29 cases are with the National Prosecution Authority (NPA) for the drafting of charge sheets and/or warrant of arrests, while 5 case dockets are being processed by the Hawks.
SARS has recovered R170-million in unpaid taxes inked to PPE contracts and R500-million in assets (including cash) are under preservation orders. SARS is also investigating 33 entities linked to politically exposed persons.
In addition, several companies that received government tenders totalling R50-million for Covid-19 related services were recently sentenced for not registering for Value-Added Tax (VAT).
The companies were awarded tenders for decontamination and deep cleansing of schools by the Gauteng Department of Education. Another company was awarded a tender by the KwaZulu-Natal Department of Social Development for provision of hygiene equipment and consumables.
The companies were convicted and sentenced in the Durban District Court last week. The sentences range from five months to ten months imprisonment (with the option of a fine). The cases follow similar convictions in Gauteng and Free State.
The Fusion Centre, established by government, has been the responsibility of coordinating the law enforcement response to allegations of corruption, or related activities, including maladministration of funds in respect of the relief and containment interventions. The collaboration between SARS and other agencies resulted in the seizure of R41-million in assets and cash linked to the entities mentioned above.
SARS Commissioner Edward Kieswetter said SARS is committed to working with all enforcement agencies to ensure increasing tax and customs compliance.
“The organization will not tire from pursuing those that abdicate their legal obligations by not registering for Value-Added Tax, which is essential for qualifying companies conducting business in both the private and public sectors.
“It seems to be patently obvious that some companies are operating outside the law, seeking to profit from a devastating pandemic that is affecting the lives and livelihoods of millions of South Africans, especially the poor and vulnerable. Sadly, most of the looted funds are being used to finance lavish lifestyles,” he said.
SARS has a keen interest in mismatched income and expenditure and incongruent cash flows. Vendors must ensure that their VAT affairs are in order – not only where returns are outstanding, but that the income streams, especially payments from contracts can be matched with the VAT that would be due and payable.
“SARS will continue to detect and make it costly for those that engage in this form of non-compliance. Government relies on SARS to collect taxes so as to provide services such as social relief to older persons, vulnerable individuals and households. A tax crime is in reality a crime that robs the poor and vulnerable,” Mr Kieswetter said.
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