SARS nails 14 taxpayers over R4 million tax refunds
The South African Revenue Service has nailed five entities and nine individuals tied to an alleged VAT refund fraud scheme, which ran to R4 million.
The taxpayers appeared before the Siyabuswa Magistrates’ Court this week following coordinated arrests.
They began appearing before the Court on 6 October following their arrests, and bail proceedings are continuing.
The arrests followed a criminal investigation by SARS into allegations that they had made fraudulent VAT refund claims through the SARS eFiling system in the name of an entity.
Warrants of arrest were executed during a coordinated operation across Mpumalanga, Gauteng, and North West, with support from the Directorate for Priority Crime Investigation (Hawks) and other law-enforcement officials.
According to SARS, the matter forms part of a broader national investigation under Project Jan Vas, in which an alleged organised criminal syndicate comprising both South African and foreign nationals is suspected of targeting SARS through large-scale tax fraud schemes.
The syndicate is alleged to operate across several provinces, including Mpumalanga, Limpopo, the North West, and Gauteng, and is suspected of defrauding the fiscus.
It is alleged that false VAT returns were submitted between June 2016 and June 2020, resulting in approximately R3.99 million in prejudice to SARS.
SARS said that VAT fraud remains one of the most serious threats to the integrity of South Africa’s tax system.
“Fraudulent refund claims divert resources from essential public services, distort fair competition and fuel illicit economic activity that undermines economic growth and development,” it said.
The tax service said it is collaborating with the National Prosecuting Authority, the Hawks and other law enforcement to detect and root out these kinds of complex commercial crimes.
The recent arrests also show that SARS’s growing data analytics and digital capability are becoming more effective at combating tax crime.
This was demonstrated in a recent case in September, where gains from a fraudulent VAT refund scheme were dispersed among several bank accounts.
Through collaborations with South Africa’s banks, the transfers were detected, accounts frozen, and money taken directly out of them. This was supported by a court ruling on the process’s legality.
As part of its modernisation programme, SARS will continue to invest in advanced technologies that enhance risk detection and identify suspicious transactions at an earlier stage.
At the same time, the innovations also support legitimate taxpayers by simplifying compliance processes and reducing administrative burdens.
SARS Commissioner Dr Johnstone Makhubu issued a threat to criminals looking to defraud the service, saying that they will be caught.
“Those who seek to undermine the integrity of our tax system will be detected, investigated and prosecuted,” he said.
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