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Extent of tax fraud unknown - SARS

11 February 2016   (0 Comments)
Posted by: Author: Amanda Visser
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Author: Amanda Visser (IOL)

The South African Revenue Service (SARS) still does not know the full extent of tax evasion, despite its work probing foreign bank accounts held by South African residents.

It has been a year since SARS confirmed some account holders had been using their offshore accounts to evade their tax obligations, both locally and internationally.

SARS received the damming information through international exchange of information agreements with foreign financial institutions.

Last year, the news that the International Consortium of Investigative Journalists (ICIJ) obtained leaked files of HSBC clients made international headlines.

In July, SARS gave South African residents with foreign bank accounts until August 12 to make use of the Voluntary Disclosure Programme (VDP), a statutory process administered by SARS, to regularise their tax affairs.

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SARS spokesman Sandile Memela says the data it has collected so far is being processed in phases for administrative reasons.

"The processing of VDP applications are in an early stage and it is too early to predict the full extent [of tax evasion]," he says.

Memela adds applications, which have been concluded to date, indicate significant tax evasion through foreign bank account structures.

He did not quantify the value of the outstanding tax that was due to SARS, which had been picked up from the applications it had finalised.

"Taxpayers who did not apply under VDP, and in respect of whom data is available are, in a phased approached, the subject of investigation and audit," says Memela.

Johan van der Walt, committee member of the SA Institute of Tax Professionals, earlier this month said the tax VDP was never designed for the regularisation of offshore funds and undeclared income.

"It can serve that purpose, but in most countries where tax residents have undeclared offshore income, they followed the route of a special dispensation."

Van der Walt, who is also the head of dispute resolution and tax controversy at KPMG, says a single stand-alone process with a limited window where people could regularise their illegal offshore capital and undeclared income and exchange control violations, would be in line with international best practice.

South Africans have received a tax and exchange control amnesty in 2003-04 which "cleaned-up" funds to the tune of R65 billion. Some say that was merely the tip of the iceberg.

This article first appeared on


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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