Business rescue, illicit trade & tax scares: critical factors Sars is raising alarm bells on

SA Revenue Service commissioner Edward Kieswetter on Tuesday detailed the affect of the Covid-19 pandemic on the economy, including the illicit trade and transportation of cigarettes and alcohol, and the changes in Sars operations during the lockdown.

Here are five takeouts from his address:

Relief measures

The organisation has updated its systems to prevent corruption and stealing of Covid-19 relief funds.

“We have had to do a significant amount of work to prepare our administrative systems to ensure the seamless implementation across the organisation.

“I have to alert you that even during trying times, there will still be those who seek to abuse and defraud the system, and Sars has raised its vigilance to ensure that those in need of the measures, indeed receive them.”

Tax scare 

The suspension of some economic activity due to the pandemic is a setback for SA's economy, which was already held back by the high unemployment rate, poorly performing state-owned companies and inequality.

“Our initial view is that revenue performance will be lower than the February budget announcement, by between 15%-20%. That means we could potentially face a revenue loss of up to R285bn and is the function of a sluggish economy and the lockdown.”

Sars staff working from home

Some staff are working from home to reduce the risk of contracting and spreading Covid-19. In rare cases where customers and employees need to physically come to a branch, Sars takes a limited number of people on an appointment basis.

“On a demand basis, where employees are physically required to come to the office, because that is unavoidable as we need to conduct essential services, we institute strict public health measures. And, more recently, occupational health measures by the department of labour.” 

Illicit trade 

The illegal trade and transportation of alcohol and cigarettes is on the rise despite the lockdown. Kieswetter cited a recent incident of a Sars raid which led it to a cigarette making plant. The activity is being investigated by police and charges will be laid once the investigation is concluded.

“In the past few days, our illicit trade unit visited a cigarette manufacturing plant and came across three of their machine lines actively producing. They intimated that they're producing for exports but cigarette export at the moment is not permissible.” 

Business rescue 

The pandemic and lockdown continues to have a devastating affect on businesses which are struggling to stay afloat. Because of this, Sars predicts a high number of business rescue cases in 2020.

“Forty-two percent of the businesses feel that they cannot operate throughout the Covid-19 pandemic. Fifty-four percent of businesses feel that they will not survive between one and three months, 46.4% of businesses have temporarily closed their doors.”