New Sars unit to target illicit trade
'Render unto Caesar what belongs to Caesar', Mboweni warns tax dodgers
The finance minister has warned those flouting tax laws that they are in the crosshairs of the new illicit economy unit at the SA Revenue Service (Sars).
“Render unto Caesar what belongs to Caesar, because Caesar can break your bones,” Tito Mboweni said on Wednesday.
This unit was similar to the former high-risk investigations structure at the tax body, controversially dubbed the “rogue unit”.
The high-risk unit was dismantled under former Sars commissioner Tom Moyane, who used a 2014 report by advocate Muzi Sikhakhane on the alleged “rogue unit” to purge key officials at the revenue service.
Moyane was instrumental in crippling Sars, leading to low tax morale and a large shortfall in revenue collection. The revenue shortfall for the 2018/19 financial year was R42.4bn.
Mboweni, during his maiden budget speech on Wednesday, said Sars was being fixed in line with the recommendations from the Nugent commission.
The new illicit economy unit was launched in August 2018 and was focused on the fight against the trade in illicit cigarettes, as well as textile dumping and illicit fuel.
Speaking to journalists ahead of his speech, Mboweni said lawlessness in terms of the tax regime would not be tolerated, especially in the underground cigarette market. He referred to the move by Sars on Tuesday to seize assets belonging to alleged tobacco smuggler Adriano Mazzotti to pay his tax debt.
Daily Maverick’s Scorpio reported that warrants, issued on Monday, allowed the high court sheriff to attach property valued at almost R34m to pay tax debt relating to a 2010 case which included cigarette smuggling and falsifying export documents.
Mboweni, without naming Mazzotti, said a “courtesy visit” was paid to “people who are behaving as if they are above the law” and that more of these visits would happen.
Acting Sars commissioner Mark Kingon said the unit was busy with “many prongs” of focus in the illicit economy to ensure that what was “rendered to Caesar was in fact rendered”.
“You are going to see and you are seeing action within the tobacco space.
“In the fuel space where we are seeing considerable round tripping and ghost exporting where duties are not being paid, [and] in textiles there is a focus to collect duties and to protect our economy and the jobs that we do have in the area,” Kingon said.
Illicit cigarette sales are said to be costing SA about R7bn.
Kingon said testimony given at the state capture inquiry about tax abuse, which included creating invoices and splitting salaries, was also being looked at by the illicit economy unit.
Former Bosasa executive Angelo Agrizzi had testified at the Zondo commission about corruption and bribery in connection with the company’s contracts with the government.
Agrizzi told the commission how Bosasa ensured that invoices were falsified to cover up corruption in contracts with the department of correctional services at the time the special investigating unit (SIU) was investigating.
He also told the commission how his salary was split between him and his wife, who on paper was employed by Bosasa but did not actually work for the company.
Bosasa, which is now known as African Global Operations, announced earlier this week that it was being voluntarily liquidated after its bank accounts were closed.
Mboweni announced during his budget speech that the revenue service’s large business unit, which was also dismantled under Moyane with the help of consultancy Bain & Company, would also be reconstituted.
“The large business unit was a major source of tax collection, and it’s skill was renowned,” Mboweni said.
He said the reintroduced unit would be officially launched in April 2019.