SARS flags crippling illicit trade
The SA economy loses billions of rands to tax evasion and illicit financial flows annually, but the SARS continues to wage its battle against tax fraud.
In 2020, Business Leadership SA estimated that the country lost around R250m daily as a direct result of illicit trade. In 2022, the Organisation for Economic Co-operation and Development estimated that SA was losing $3.5bn to $5bn a year, or more than 1% of its GDP, to illicit financial flows.
Moneyweb reports that SARS notes that the impact of activities within the illicit economy is enormous and poses a real threat to the country.
It quotes the UN, which stated that ‘money flowing to organised crime outstripped all the money that the developing countries could devote to long-term development’.
A large number of illicit cigarettes are consumed in SA every year. ‘That means we lose excise revenue every year.
That sort of revenue would build quite a few more schools, roads and houses which we need,’ says SARS.
Moneyweb recently reported that cheap cigarettes, sometimes selling for around R5 per packet of 20 in the market, translate into an estimated R28bn loss to the fiscus annually... Or put differently, around R100m each working day.
One recent success for SARS was a court confirmation of a preservation order against several entities associated with Amalgamated Tobacco Manufacturing.
The KZN High Court (Durban) in June issued its judgment in an application by SARS for the confirmation of a preservation order against two entities, Plus0 and Dodo, after a provisional preservation order was granted against 20 respondents in February.
Moneyweb notes that the matter pertains to a SARS investigation into a ‘co-ordinated scheme of tax evasion’ and the potential dissipation of assets.
The two entities wanted the preservation order to be discharged completely.
Plus0 and Dodo were placed in the hands of a curator bonis following the execution of the preservation order in March this year.
Tax Justice SA last week issued a statement welcoming the confirmation of the preservation order.
Its founder, Yusuf Abramjee, said the order will allow SARS to continue securing assets while investigating more than R96m in suspicious financial transfers involving the Pietermaritzburg-based cigarette maker.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.
