The South African Revenue Service (SARS) says it has identified extensive non-compliance within the formal and informal cash merchants environment, which includes merchants in the fast-moving consumer goods (FMCG) wholesale and retail industry.
SARS has identified 295 cash and carry entities involved in customs fraud, tax evasion, claiming of undue Value-Added Tax (VAT) refunds, illegal/illicit expatriation of funds off-shore, and 1792 outstanding tax returns and 130 entities have outstanding debt of approximately R1.5 billion.
“Information in possession of SARS indicates there is involvement of organised syndicates with sophisticated organisational structures. SARS has identified various schemes designed to avoid the detection of significant amounts of cash transactions.
“One such a mechanism is the so-called ‘Ooplang’ transactions. The terminology ‘Ooplang’ also means: the practice of keeping a portion of VAT, collected on behalf of the tax man, instead of declaring the full amount then hiding it from the government,” said the revenue service.
It noted the prevalence of various schemes whereby the VAT system is manipulated by creating apparent legitimacy, but actually facilitating the syphoning of VAT money from the system.
Some of these identified schemes include the so called “ghost exports” which involves zero-rating supplies for VAT purposes on the strength of exports, whereas these supplies are not actually exported; non-recording of the sale of cell phone airtime and manipulation of loan accounts, claiming fraudulent invoices for VAT and income tax purposes.
In many instances money laundering is an element of these schemes.
SARS said it has made concerted efforts over the past years to afford all honest taxpayers the opportunity to regularise their tax affairs, including the small business amnesty process in 2006 and the voluntary disclosure process introduced in 2011.
“SARS, the South African Reserve Bank and law enforcement agencies will be proceeding with robust operations nationally that will identify major role-players.
“The process will also be honing in on the full supply chain which will include colluding suppliers, connected companies, large clients, hawkers of ‘banking facilities’, local and international facilitators etc,” it said.
It warned that those who have benefitted from customs fraud, tax evasion and syphoning of funds may expect “very little sympathy from the relevant authorities”.
SARS invited taxpayers to take up the voluntary disclosure programme before audits of such entities commence.
Anyone wishing to provide any additional information, documents and records are welcome to approach SARS by phoning the SARS anti-corruption and fraud hotline on 0800 00 2870 or filling out a suspicious–activity report form on www.sars.gov.za or contacting 0800 00 7277. – SAnews.gov.za
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