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Sars inquiry: 'I warned execs about dangers of restructuring'

The former head of compliance Dr Thabelo Malovhele has testified at the Nugent Commission of Inquiry in Pretoria.

Picture: EWN.

PRETORIA - The South African Revenue Service (Sars) commission of inquiry has heard how unnecessary and costly restructuring led to the revenue service’s compliance unit being disbanded and ultimately a decline in revenue collection.

The former head of compliance Dr Thabelo Malovhele has testified at the Nugent Commission of Inquiry in Pretoria.

He developed the strategy to improve taxpayer compliance.

The commission is investigating tax administration and governance since the appointment of Tom Moyane in 2014.

Malovhele says between 2007 and 2013, he was responsible for developing a compliance programme until the restructure was announced.

“The was a list of the old function, new functions and functions that were withdrawn and I immediately realised that the research function is missing.”

He says he warned the executive of the dangers.

“We are talking a lot more about revenue collection but there is no discussion about compliance. And from the work that I’m doing, I see compliance slipping. It is just a matter of time [before] revenue starts to fall off.”

Malovhele says despite revenue declining and a decision last year to reconstitute the compliance unit, Sars still has no compliance unit.

HALF-TRUTHS

The Nugent Commission of Inquiry has heard that Sars management was not entirely truthful when reporting to Parliament that it had developed a tax compliance strategy.

It's emerged the revenue service had actually rehashed a four-year-old document that was no longer relevant.

Ramovhele told the commission that last year, Parliament needed Sars to produce a compliance strategy but under Moyane’s reconstruction process, the compliance unit had been dismantled.

He says as a quick measure the executive committee extended the use of the previous compliance programme drafted in 2014.

Commissioner Mabongi Masilo questioned this.

“What you’re telling us is that someone at Sars knowingly lied to Parliament about the compliance programme?”

Ramovhele responded: “I wouldn’t use the word ‘lie’ but we told Parliament half-truths.”

Three Sars executives are scheduled to testify on Wednesday.

(Edited by Winnie Theletsane)