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Tax dodgers, fake BEE scams hit in govt tender system

07 September 2015   (0 Comments)
Posted by: Author: Phillip de Wet
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Author: Phillip de Wet (Mail & Guardian)

Nhlanhla Nene pledges to end billions of rand lost in dodgy tenders with the roll-out of a compulsory supplier database in the next seven months.

Seven months from now anyone who wants to do business with the state – including fake black companies, grasping civil servants and tax dodgers – will have to do so by way of a central supplier database. And the tax dodgers and other malign actors will, with any luck, find it difficult to do so. 

"Today, we have an opportunity to witness history when we take one of the many small steps towards that great South Africa we all believe in,” Finance Minister Nhlanhla Nene said on Tuesday at the launch of the national central supplier database (CSD) in the Eastern Cape. 

What Nene hopes to consign to the rubbish heap of history is the R30-billion or so the government believes was lost to corruption through the R500-billion odd in public spending in the 2013-2014 financial year, an estimate some think conservative.

Also in the firing line: red tape for non-malignant companies in good standing, which currently have to deal with 36 different state supply chain management systems of highly varying standards of quality.

By April 1, Nene said, "it will be mandatory for all suppliers that want to do business with the state to be registered on the CSD”. Registration is now open, via a web portal.

The CSD is a single technical solution to a number of problems. A recent government review of its supply chain showed not only problems of corruption but also non-compliance with auditing and procurement standards, an inability to compare pricing, and a general failure to see trends across sectors and spheres of government.

As a first step, the CSD is to interface with databases held by the likes of the South African Revenue Service (SARS) and with the government payroll system, to weed out fake tax certificates and identify civil servants doing business with the state on the side. It will also automate the checking of identity numbers with the department of home affairs.

Anecdotally, evidence in the Nkandla debacle has shown that fake tax certificates can crop up in even projects considered extremely important, and extremely security-sensitive.

The CSD will also allow for the use of a single blacklist of companies that have been found in breach of law or regulation.

On the other hand, "suppliers that are in good standing on the various compliance requirements of government, will experience a reduction in red tape and administrative burden when doing business with government”, Nene said. 

The database, and accompanying centralised tender system operational since April, was first announced in February, and immediately widely welcomed. However, concerns remain about the ability of all South Africans to access it, and whether it will represent a single point of failure in government procurement, either in downtime or in being targeted by those intent on defrauding the state.

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Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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