SARS criminal unit looks to stem rising tax fraud

The SA Revenue Service (SARS) wants to increase the number of fraud cases it finalises and hands over to the National Prosecuting Authority (NPA) for criminal prosecution, to stem the rising tide of noncompliance.

In the tax year ending February 2019, the organisation’s criminal investigations unit has set itself a target of finalising at least 500 cases for handover to the NPA, said Sars head of criminal investigations Neo Tsholanku.

This is compared with the target of 350 such cases in the tax year ending February 2018.

The unit employs 288 people out of the total SARS workforce of 14 000.

Each year between the 2013 and 2018 tax years, SARS finalised and handed over between 325 and 469 cases to the NPA. Others were closed for reasons including a lack of evidence.

In the 2018 tax year, the unit finalised over 429 cases. They were mainly related to VAT or pay-as-you-earn (PAYE) tax.

As at the end of March, the unit was working on over 1 000 cases.

The target of 500 was about ensuring that there was compliance with payment of all types of tax.

Tsholanku said there had been an increase in fraud across the board, but particularly involving VAT.

“We can’t just stay there and deal with the increase in VAT fraud. We have to do something about those.”

Each year, SARS loses billions of rands in tax revenue to VAT fraud. Between 60% and 80% of the tax cases currently in court were related to this type of crime.

SARS spokesperson Sicelo Mkosi said VAT fraud was largely committed by criminal syndicates that “scammed the system” by using shell entities.

“Company income tax and PAYE are paid by more or less registered entities and there is some level of compliance,” he said.

In a recent statement, SARS said that over the past few years there had been an “unacceptable increase” in the non-submission of returns, including for corporate income and personal income tax.

At the end of March, active taxpayers owed SARS approximately 30 million returns, in many cases showing that a single taxpayer had several outstanding returns.

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