Wed, 26 Feb 2020

The South African Revenue Service's unit that tackles illicit financial flows has recovered R2.6bn in taxes since April 2019.

Delivering the keynote address at the International Customs Day celebrations on Friday, which was themed: "Customs fostering sustainability for people, prosperity and the planet," SARS commissioner Edward Kieswetter updated the public on efforts to combat illicit activities. This includes tobacco smuggling, illegal imports, counterfeit goods.

The revenue service has been working with the National Prosecuting Authority (NPA) in a multi-pronged strategy to clamp down on illicit activities. In the medium term-budget policy statement in October 2019, Finance Minister Tito Mboweni allocated R1bn to SARS and R1.3bn to the NPA to bolster their efforts in combating corruption and improving revenue collection.

Among the other efforts made by SARS, include improving the internal organisation. It has reconstituted capacity to deal specifically with criminal and illicit economic activities.

Kieswetter said a collaborative and coherent approach was taken and, as a result, the institution has been working with government officials and agencies like the Competition Commission.

"Our interventions are supported by data analytics, legal services and debt recovery actions. These efforts have begun to bear fruit but we need to step up significantly, and to date we have recovered R2.6bn in taxes since 1 April 2019," he said.

Apart from recovering revenue, Kieswetter said that SARS has been doubling efforts to seize and remove illicit products from circulation.

Kieswetter: Cross-border organised crime on the rise

In a statement issued by SARS following the event, the revenue service said that there is an increase in criminal activity directed against its officials, because of efforts to stop illicit financial flows. Laptops and confidential information have been stolen.

But SARS assured despite the criminal activities, its systems have not been breached and its information remains secure.

Huge headache

In his address Kieswetter said that the illicit economy is a "huge headache" for customs and partner cross-border regulatory agencies.

"Criminals have become brazen. Sadly, the broad culture of corruption across society, including the public and private sector has handed a hard blow to compliance.

"Criminals feel morally justified to break the law and thieve the fiscus from taxes and duties [...], as they see the very state and broad prominent members of society themselves as being guilty of corrupt behaviour, and we need to call it out unapologetically," Kieswetter said.

The illicit economy has led to significant losses to tax income annually, he said. This has a negative impact on the fiscus and threatens the country's financial independence.

"Our sovereignty rests on financial stability and independence. If we had to approach other agencies and borrow money, we give away our sovereignty," Kieswetter warned.

SARS is also in the process of conducting evidence-based research to quantify the size of the illicit economy in SA, as well as find ways in which it takes place and understanding the circumstances in which it unfolds. The study is expected to be completed in March 2020.

More than 180 countries mark International Customs Day - which marks the inaugural session of the Customs Cooperation Council, held on January 26, 1953. Since 1994, the Customs Cooperation Council has been known as the World Customs organisation.

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