Acting South African Revenue Service (Sars) commissioner Mark Kingon is faced with the grim task of restoring the revenue collectors’ credibility following his appointment by President Cyril Ramaphosa in March this year.
Speaking at the 21st Southern African Internal Auditors conference in Sandton on Monday Kingon did not shy away from addressing the crisis of credibility facing Sars.
“Each day when I wake up and I see news articles that seems to bring our credibility issue up … it worries me but I am committed that my organisation should be seen to be doing what is right,” he said.
The reputation of Sars was tarnished under the leadership of suspended commissioner Tom Moyane following several allegations of money laundering and fraud.
The most recent report, published by Daily Maverick last week, details how Moyane had allegedly aided Oakbay to avoid tax, and facilitated the illegal payment of value-added tax (VAT) refunds to the controversial Gupta family. According to the report, Terbium financial services is one of three companies that benefited from the VAT refunds claim from Sars.
Terbium Financial Services belongs to Nhlamulo Ndhlela — who is reportedly Moyane’s nephew — and acted as a pay agent for the Oakbay group.
The Hawks are investigating Moyane’s alleged contravention of Section 44 (3) of the VAT Act which prohibits money laundering.
Speaking to the Mail & Guardian, Kingon said that he had taken note of the reports but declined to comment, saying he is currently receiving legal advice and engaging an internal draft report on the matter.
In his address to the conference, Kingon noted that low levels of credibility, public trust and tax compliance were a serious concern and warned that failing to address this crisis will have a negative impact on the fiscus.
Tax compliance in South Africa has dipped recently, leaving Sars struggling to meet its tax collection targets. The revenue service has set its target at R1.345-trillion for this financial year. Thus far, two million taxpayers have submitted their returns and SARS has paid out R6-billion in refunds, Kingon said.
He also condemned individuals who had failed to pay their taxes, saying this was a serious concern for Sars. “For the months April and May for VAT alone we had some 35 000 vendors who chose to submit tax returns to us but simply chose not pay the VAT due to us and VAT unpaid remains around R1.5-billion,” he said.
In April, Sars released a list of 10 individuals for failing to submit returns. “This is something we are going to be doing far more regularly and publish these people’s names and it is my intention to have people prosecuted. We will be taking people on,” Kingon added.
He further warned that this season Sars had become aware of schemes used to avoid paying tax.
Kingon told the audience that Sars has drawn up a service charter, implemented in July, to encourage tax and customs compliance. The service charter is a living set out document to engage with taxpayers said Kingon, and is aimed at improving the service Sars.
“We have set the bar quite high, although some journalists have said our standards are easy to meet. Well let’s wait and see if they are easy to meet.”