Supplementary Budget 2020

Nugent Commission will reveal if SARS misrepresented revenue collection - Treasury

Retired judge Robert Nugent. (Photo: Netwerk24)
Retired judge Robert Nugent. (Photo: Netwerk24)

Treasury cannot say if SARS had intentionally withheld VAT refunds in an effort to misrepresent revenue collections, members of Parliament heard.

Treasury officials on Friday responded to public comments made on the mini budget to the Standing Committees on Finance and Appropriations earlier this week.

Among the issues addressed was the backlog in VAT refunds, which will be paid out this year.

Scof chair Yunus Carrim enquired if Treasury had known SARS was misrepresenting revenue. To this, deputy director general Ismail Momoniat responded that the Nugent Commission which was appointed by President Cyril Ramaphosa is tasked to and capable of determining what exactly went wrong at the revenue service. The commission wraps up its work in November.

On Thursday the presidency announced that Ramaphosa would be following the commission's recommendation that SARS boss Tom Moyane be removed with immediate effect.

Momoniat referred to the Nugent interim report, which he described as "disturbing" in terms of his revelations that the revenue service had regressed in the past four years under Moyane's leadership.

Momoniat said that the matter of VAT refunds lies with SARS, because it is responsible for revenue collection. The backlog in VAT refunds came as a shock, he admitted. "No doubt the market was shocked by the VAT numbers and where we are on collecting revenue."

He stressed that the Nugent Commission would provide the answers needed.

Treasury's director of personal income taxes and saving, Chris Axelson also responded to questions about whether the revenue generated from the VAT hike earlier this year had been lost in paying refunds.

He explained that Treasury had revised upwards the VAT refunds by R20bn – R9bn is due to a revision in expected VAT refunds while the remaining R11bn of which relates to backlogs from previous years.

"In effect, revenues will be R11bn lower than they should be because we are paying out the backlog of VAT refunds."

This is not a loss of revenue - but rather a timing issue. "In previous years, revenue was R11bn higher, it will now be R11bn lower," he said.

The VAT payout will have a "once-off" impact this year and will fall away next year, he explained.

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