Tax probe commission to be announced this week

23 May 2018 - 11:35 By Linda Ensor
SARS Pretoria office. File Photo.
SARS Pretoria office. File Photo.
Image: Gallo Images/Foto24/Cornel van Heerden

President Cyril Ramaphosa is expected this week to announce the terms of reference of the commission of inquiry into the South African Revenue Service (Sars) and who will serve on it‚ Treasury deputy director general Ismail Momoniat said in Parliament on Wednesday.

He told members of Parliament's standing committee on finance that the commission will focus on past issues such as transgressions related to various tax laws.

The commission is expected to consider the adequacy and legality of steps that Sars took to address revenue shortfalls in the last two years‚ including the unauthorised bonuses to top executives and withholding of refunds to ordinary tax payers.

Also expected to be included in the terms of reference is Sars's adherence to tax administration processes including for VAT refunds‚ mining rehabilitation funds and adherence to customs and excise provisions with particular reference to tobacco.

"Treasury hopes that the commission's work could also assist in strengthening Sars's capacity to deal with illicit financial flows and tax evasion by highly connected individuals‚" Momoniat said.

He noted that‚ given the law on tax confidentiality‚ only a commission of inquiry had the power to go into specific tax-related transgressions or to consider whether there were any transgressions related to‚ say‚ VAT refunds.

Momoniat referred to the role of private-sector auditing‚ forensic and legal companies involved with the investigation of former Sars head of business and individual taxes Jonas Makwakwa. "KPMG and Hogan Lovells were directly commissioned by Sars and remained silent (hiding under 'confidentiality') even when their reports were deliberately distorted to mislead Parliament and government‚" he said.

"Treasury hopes that the commission of inquiry will also look at all correspondence between these companies and Sars and to what extent there was abuse. Overseas regulators are much more intrusive and act quicker than many of our regulators."

Momoniat raised the question of the confidentiality of tax matters and how to ensure that this was not exerted to hide criminal and administrative abuses. He questioned how to ensure more transparency to expose blatant acts of corruption or state capture‚ which also affect the integrity of Sars.

In terms of the law all tax-related information is only known to Sars and the specific taxpayer. Sars is not allowed to tell even the minister of finance‚ the president or anyone else.


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