What is a tax crime?

Tax crime manifests in many forms. Here are some key examples:

  • People don’t declare income to evade paying tax on that income.
  • People lie about their expenses to reduce the tax they pay or to obtain an undue refund. For example, they may lie about their business mileage, business expenses or even medical contributions.
  • People just don’t submit a tax return to SARS or fail to truthfully respond to our questions.
  • Employers sometimes deduct tax from employees and never pay it over to SARS.
  • Vendors, whether registered for VAT or not, sometimes charge VAT and never pay it over to SARS.
  • Entities submit fraudulent invoices in an attempt to pay less tax or obtain undue (fraudulent) refunds (Income Tax and VAT).
  • Individuals do not register for tax purposes to evade paying their dues.
  • People do not submit returns as and when required to evade paying taxes due to SARS.
  • Employers withhold employees tax (PAYE) and do not pay it over to the SARS.


Top Tips

Here are some top guidelines. The list is by no means definitive, but these are some indicators and even some common misconceptions.

  • When a business offers you an attractive discount for cash and no receipt, it may be because they will not declare VAT to SARS.
  • When an employer fails or refuses to provide you with an IRP5.
  • If you notice significant fluctuations in your tax deductions in your monthly payslip, It needs looking into.  
  • Driving expensive cars and living in expensive neighbourhoods don’t always equate to tax crime. People have different priorities.
  • Beware of scams and phishing. There is a steady increase in email scams and phishing attacks in which the SARS brand is being abused.  Members of the public are randomly emailed with false “spoofed” emails made to look as if these emails were sent from SARS but are actually fraudulent emails aimed at luring unsuspecting taxpayers to disclose private and confidential information such as bank account details. Examples include emails that appear to be from [email protected], or [email protected] indicating that taxpayers are eligible to receive tax refunds. These emails contain links to fake forms and malicious websites purporting to be authentic but aimed at tricking the unwary into entering personal information such as bank account details which criminals then extract and use for criminal activities. To see the latest scams which are being sent, visit our web page about scams.

Please note these are scams, and taxpayers should take note of the following:

  • Do not open or respond to emails from unknown sources. 
  • Beware of emails that request personal, tax, banking and eFiling details (login credentials, passwords, pins, credit/debit card information, etc.) as SARS will never ask taxpayers for such information in an email. 
  • SARS will not request your banking details by phone, email or websites. 
  • Beware of false SMS’s

Click here to learn about Identity Fraud

To report or to get more information on phishing, please send an email to [email protected] or call the Fraud and Anti-Corruption Hotline on 0800 00 2870.

 

How SARS views it

SARS is on a journey to foster a culture of voluntary compliance. Here at SARS we have a simple philosophy – most people want to do the right thing and pay tax.

So we want to find that small portion of people who deliberately want to cheat the tax system. In short, it’s these people who will face criminal prosecution and maximum non-compliance penalties.

Let’s spell it out clearly. SARS expects every taxpayer to meet their obligations and pay their fair share of tax.  Companies and their directors will face criminal prosecution if they transgress the law and try to defraud the fiscus of any revenue that is due to the state.

It’s simply not worth the risk.

We want to make reporting a tax or customs crime easy for you. If you want to know what we may consider being a suspicious activity click here. So we’ve even created an online form for you to complete. What do you need to get together before you start?

  • It’s helpful if you have an ID number; Tax Reference number of the person you are reporting. But it’s not essential. Even a car registration number will help
  • We’ll ask you if the crime is about business tax, personal tax or customs
  • You decide if you want to remain anonymous
  • But the form is simple and easy to complete:

If you want to report a suspicious activity, click here. Or you can call us anonymously on 0800 00 2870.

You need to know that we won’t get back in touch with you with our progress as we can never discuss a person’s tax affairs with anyone else. But rest assured your contribution is vital and we will be looking into it. SARS is prohibited from providing feedback, even about whether or not an entity is under investigation. You will have to be patient and allow the transparent process SARS has introduced to manage the complaints received to take its course.

Your information is valuable to us. Reporting a tax crime is the right thing to do.

 

SARS and the Criminal Justice System

When enforcing tax and customs legislation, SARS plays a particular role within the Criminal Justice System.  SARS is statutorily mandated through its legislation to conduct criminal investigation into tax offences.  Once the criminal investigation of the alleged tax offence is finalised, a formal complaint is registered with the South African Police Service to give effect to commencing the criminal justice process. The case docket is referred to the National Prosecuting Authority (Special Tax Unit prosecutors) to decide whether to institute a criminal prosecution. 

Furthermore, SARS has a role in administering laws not necessarily related to tax and customs but are essential to protect the South African economy. For example, Customs must prevent harmful goods from entering South Africa, such as alien species which may endanger our natural resources or residents.

For these reasons, SARS supports other government agencies in the investigation of money laundering and corruption activities. We are active participants in the Multi-Agency Working Group (MAWG) and the Anti-Corruption Task Team charged with combating government corruption. Working through these forums has enabled SARS to confront complex international schemes that we could not have achieved independently.

Laws such as the Financial Intelligence Centre Act (FICA), the Prevention of Organised Crime Act (POCA), and Prevention and Combating of Corrupt Activities Act (PRECCA), Drugs and Drug Trafficking Act, oblige us to support the Police, the Financial Intelligence Centre (FIC) and other agencies in criminal investigations.

To facilitate collaboration between different agencies SARS has entered into Memoranda of understanding (MOU’s) with various government agencies. A MOU between the NPA and SARS is aimed at increasing our collaborative efforts to ensure that those who must be brought to book – whether it’s tax offence or a crime – are brought to book.

SARS has partnered with the US’s Internal Revenue Service Criminal Investigation (IRS-CI) division to detect and fight tax and economic crimes affecting both countries. SARS and the IRS-CI said they would work together to identify and investigate crimes such as international public corruption, cyber fraud, and money laundering. The newly formed partnership has already uncovered emerging schemes perpetrated by promoters, professional enablers, and financial institutions.

 

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