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Sars declares war on 'crippling' illicit economy

It’s estimated about R7 billion is lost in the illicit tobacco trade alone.

South African Revenue Services (Sars) Commissioner Edward Kieswetter briefs the media in Pretoria on 4 June 2019. Picture: @sarstax/Twitter

JOHANNESBURG – South African Revenue Service (Sars) commissioner Edward Kieswetter said the revenue service would take a fresh look at the illicit economy in South Africa in order develop a new approach to dealing with the problem.

Kieswetter was responding to a question at a briefing in Pretoria on Tuesday, where he said he would not be reviving units shut down by his predecessor.

It’s estimated about R7 billion is lost in the illicit tobacco trade alone. Kieswetter said the illicit economy was not something they'd ignore.

“So, we’ve commissioned a piece of strategic work internally that says we should reassess that phenomena, quantify to understand it better. Secondly, let’s understand how, in terms of our mandate, we can respond to the phenomenon.”

He said once Sars had decided what their response terms should be, capacity would be created to deal with the illicit economy.

“And that may give birth to what you call a unit, but it won’t be resurrecting anything that existed. It would be from the first principle, applying our mind, coming out with an appropriate response and appropriate organisational arrangement that will deal with this.”

Kieswetter said Sars would work closely with law enforcement agencies.

NUGENT COMMISSION

Kieswetter said he took the findings of the Nugent Commission of Inquiry seriously and would implement the recommendations as required.

Retired Judge Robert Nugent investigated tax administration and governance over a four-year period starting in 2014. His findings led to President Cyril Ramaphosa removing former commissioner Tom Moyane from his position.

Kieswetter said on his first day as the commissioner he told staff where he stood in relation to a recent investigation related to the revenue service.

“I’m clear on the Nugent commission on the state capture project and I’m clear that to the extent that the recommendations that are coming out of this I’ll address all of them,” he said.

He said Sars was reviewing all disciplinary cases from 2014.

“And where we believe that these cases were created or manufactured to support the corrupt intent, we obviously had to address that.”

Kieswetter said upon his arrival at Sars he found an organisation where staff had lost confidence in management, but he was committed to changing that.

CONFIDENT OF MEETING REVENUE COLLECTION TARGET

Kieswetter confirmed the organisation's revenue collection target was over R1.4 trillion, an increase of 10% from the previous season.

Kieswetter said his confidence in meeting the target was not based on the strength of the economy, accepting that there were difficulties there. He explained that Sars would work within that constraint.

He said it was the service's ability to enforce tax compliance that would help achieve the target.

“One hundred percent of our effort at the moment is to ensure that we understand the risks that should direct our work and that we direct our work appropriately to give us the best possible chance to collect the revenue that is due. I can tell you now that the internal message is R1.4 trillion is the target and we will strive to achieve it.”

Kieswetter warned that Sars was working closely with law enforcement agencies to track down and prosecute people and companies not paying their dues.

The 2019 tax filing season officially starts next month.

(Edited by Leeto M Khoza)

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