South African Revenue Service (Sars) Commissioner Edward Kieswetter has stayed true to his commitment to convicting and sentencing tax criminals.
This year has seen a steadily increasing rate of convictions, mainly in offences committed under Customs and Excise, value-added tax (Vat) and pay-as-you-earn (PAYE) tax.
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Customs officers in particular have notched up impressive busts involving illicit cigarettes, and imports of rhino horn and drugs.
Sars’s investigating team cooperated with the National Prosecuting Authority (NPA) to secure a conviction and sentencing of former Oakbay director DP Naik for cigarette smuggling.
The various offences and the outcomes for the year, per Sars’s press briefings, are detailed below.
|Customs and Excise – Cigarettes|
|DP Naik, CEO of Oakbay||Falsified export documents||R18 million||10 years|
|Fictitious details||Illicit consignment of 1 032 cartons||R20 million||Cigarettes destroyed|
|Investigation ongoing||Unregistered tobacco manufacturing plant uncovered||Plant and machines “detained”|
|Investigation ongoing||Three shops suspected of selling illicit tobacco products||R400 000||Goods seized|
|Investigation ongoing||Illicit cigarettes||R10 million||Goods seized|
|Illicitly imported||Illicit cigarettes||R17 million||Goods destroyed|
|Search and seizure operation||Illicit cigarettes||R2.4 million||Goods seized|
|Tanker seized at border||Illicit cigarettes||R5.5 million||Truck and cigarettes detained|
|Illegal imports||Illicit cigarettes||R18 million||Cigarettes will be shredded and moved to secured landfill|
|Customs and Excise|
|Investigation ongoing||Dried abalone worth R1.6 million hidden in a trailer||Illicit trade||Not finalised|
|Goods from China||Full container load of various clothing items incorrectly labelled as playing cards||R500 000||Goods seized|
|Drug bust||Calcium hydroxide used to produce crystal methamphetamine||R40 million||Importer and driver arrested|
|Drug bust||Mandrax||R105 million||Goods seized|
|Warehouse in Mpumalanga||Duty-free liquor being recycled back to market||R15 million||Goods seized|
|Investigation ongoing||Rhino horn – 160kg||No details||Goods seized|
|No details||Rhino horn||R53 million||Goods seized|
|Mr MJ Ntabe of Ntabe Trading & Projects CC||False tax invoices||R1 million||8-year sentence (3 years suspended)|
|Rudi Willemse, Hein Fourie and Abraham van Wyk (deceased)||Willemse and Fourie arrested 17 years after sentencing, and eight years on the run||R2.7 million||Willemse and Fourie now serving 7-year sentence|
|Unpaid tax debts|
|Raptosec Logistics||PAYE not paid||R39 million||Assets attached|
|Edison Power Gauteng||PAYE not paid||R18 million||Assets attached|
|Tswaing Local Municipality||PAYE, UIF and skills development levy (SDL) not paid||R30 million||Assets attached|
|Independent Minds 107||PAYE, UIF and SDL not paid||R10 million||Assets attached|
|Shefa Group||Vat, PAYE, UIF and SDL not paid||R15 million||Assets attached|
|Lefa Tsaoane of Above Limits Trading CC||Submitted nil Vat returns||R400 853||Suspended sentence; Tsaoane to refund amount|
|Yandisa Bavulele of YB Mashalaba and Associates||Claimed false PAYE credit||R5.7 million||Suspended sentence and fine|
|Khathutshelo Mashau||Diverting various taxpayer refunds to own bank account||Not disclosed||48 years direct imprisonment|
|Tax practitioner given suspended sentence for Vat non-compliance|
|Mr R Luvhengo||48 Vat offences||Suspended sentence|
Non-compliant PPE companies
According to Sars, 52 non-compliant companies received R1 billion in contracts for the supply of personal protective equipment (PPE) and Covid-19 related services:
- 11 companies have been convicted;
- seven cases are currently on the court roll;
- 29 are with the NPA;
- Five case dockets are being processed by the Hawks;
- R170 million in unpaid taxes has been recovered;
- R500 million in assets (including cash) is under preservation orders;
- 33 entities are linked to politically exposed persons.
Several companies (not named) that received government tenders totalling R50 million for Covid-19 related services (decontamination and deep cleansing of schools) were sentenced (no details given) for not registering for Vat.
The companies were awarded tenders 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.
According to Sars: “The companies were convicted and sentenced in the Durban District Court … The sentences range from five months to ten months imprisonment (with the option of a fine)”. R41 million in assets and cash was seized.
“Sars has a keen interest in mismatched income and expenditure and incongruent cash flows.”
Sars has not released the names of the individuals or the companies.
Collaboration with other organisations
In July 2021 Sars issued a press release announcing that it had joined forces with the IRS Criminal Investigation to fight international crimes. IRS-CI delivered an offshore tax evasion training webinar to approximately 40 Sars enforcement officers that incorporated “transnational financial crimes specific to offshore banking schemes, tax evasion, and conspiracy”.
Moneyweb asked Sars to provide an update on this collaboration, and whether this collaboration has resulted in any convictions. Sars has not responded.
Sars and the National Directorate for Public Prosecution issued a joint statement that they will collaborate and “deal with key challenges of tax crime and non-compliance, eroding the tax revenue base and the integrity of the tax system”. The immediate focus will be employers not paying over PAYE, not filing returns, “as well as other general corrupt activities”.
Moneyweb asked Sars if tax evasion (such as not declaring illicit proceeds to Sars, and the tenderpreneurs who have not registered for tax or declared any income) will be prioritised in 2022. Sars has not responded.