SA Revenue Service (Sars) commissioner Edward Kieswetter says the tax agency has asked for additional resources to strengthen its investigative capacity to deal with an increase in its workload due to tax evasion related to Covid-19.
Various government institutions, including all of its law-enforcement agencies, Sars and the auditor-general, have started working together as part of a fusion centre to look into the corruption related to the country’s response to combat the novel coronavirus.
On Friday, the standing committee on public accounts (Scopa) interrogated the role of the newly established interministerial committee (IMC), which is chaired by justice minister Ronald Lamola and responsible for looking into Covid-19 corruption from the perspective of the executive.
While Lamola and his team spelt out what the role of the committee would be, the various institutions briefed Scopa on the role that they were playing in looking into corruption related to Covid-19.
Kieswetter took over as head of Sars after the institution was hollowed out during the state-capture years.
Sars had strong investigative capacity, but this was one of the areas in the agency eroded over the past few years.
Kieswetter said one of the key issues in beating corruption was to strengthen the overall capability of the tax-collecting agency.
He said Sars had made a detailed request to the IMC for additional resources, which was needed not only for its work on Covid-19 corruption. “Unless we significantly boost the resources at Sars — specifically in ... technical, investigative areas — then we are fighting a losing battle, and I have to say that very transparently,” Kieswetter said.
The illicit economy had grown as a result of the lockdown ban on trade in liquor and tobacco products, which has now been lifted. The tax base could be significantly eroded as job losses increased and businesses closed down.
Besides the additional resources requested by Sars from the IMC, which it needs to conduct certain investigations it has not yet been able to touch, Kieswetter highlighted other needs for the battle to be won.
He said Sars had picked up areas of abuse in tax-compliance processes, and it needed to look at reviewing and strengthening this as too many suppliers “are slipping through the hole by playing all kinds of games and then they present a risk to the fiscus”.
Kieswetter said collaboration with the agency had to be strengthened, as he did not think it was fighting its best game if it did not get it right.
He said Sars had also begun to do significant work to strengthen its case-management and selection process.
The agency had expanded its use of data and artificial intelligence and established an enforcement committee with strong project management so that Sars focused on execution despite limited resources, Kieswetter said.
He said there were all types of “shenanigans” in terms of noncompliance, which included people not declaring income they made out of personal protective equipment (PPE). Kieswetter said that even though they made that money from the government, people still cheated the government on it.
He said they had outstanding tax returns, filed fraudulent and incorrect tax returns and obtained tax clearance certificates by “fiddling the system”, while others were not registered for VAT.
Kieswetter said the committee would be surprised to know that many companies were not part of the PPE business when they received tenders from the government.
“We found providers that are registered as pubs, as IT companies as car-washing companies, as property-letting companies, as bakeries and events-management companies, and they all have been successful,” Kieswetter said.
He said there was a significant amount of work, but that the dial was beginning to move. “If we are supported with those additional resources we can move even faster,” he said.
Kieswetter said that the burden of proof in tax matters was lower than in criminal prosecutions, and that it was “low-hanging fruit for us to begin to keep these scoundrels busy”.
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