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Tax laws are the same for Zuma, says SARS

Friday, 28 March 2014   (0 Comments)
Posted by: Author: Linda Ensor
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Author: Linda Ensor (BDlive)

THE South African Revenue Service (SARS) insisted on Wednesday that President Jacob Zuma was subject to the same tax laws as all other citizens and was obliged to disclose all the income he received.

The tax authority was responding to the Democratic Alliance’s (DA’s) announcement that it would ask SARS to conduct an investigation of Mr Zuma’s affairs in respect of the tax obligations for the personal benefit he derived from the R246m that has so far been spent on his private homestead in Nkandla.

The DA has estimated Mr Zuma’s total benefit from the upgrade to amount to R52.8m rather than the R10.6m the Department of Public Works said he owed in his private capacity. Further, the party has written to Mr Zuma requesting him to table his repayment plan for the amount he owes in Parliament.

Assuming the president repaid the state the R10.6m, he would owe R16.8m to SARS as a fringe benefit tax for the outstanding estimated benefit of R42.2m, DA finance spokesman Tim Harris said at a media conference on Wednesday.

SARS spokesman Adrian Lackay could not say whether or not the institution would investigate Mr Zuma’s finances if and when it received the request from the DA. A confirmation would contravene the legal requirement that the tax affairs of all citizens be kept confidential.

Mr Lackay could only say that SARS received about 35,000 suspicious activity reports per year against taxpayers and non-registered entities. In addition, its risk engine identified more than 1.2-million cases per year that required closer inspection.

"All these cases are processed and where a complaint is found to have a reasonable basis, the matter is referred to audit or criminal investigation," Mr Lackay said. "Any South African president, any publicly elected official or any official appointed to hold public office is subject to the same legal requirements regarding their tax affairs" as all other citizens.

The DA estimates that the construction of the cattle kraal, cattle culvert, the chicken run, the swimming pool, the visitors’ centre, military centre and the amphitheatre at Nkandla cost at least R52.8m. Public Protector Thuli Madonsela found that these facilities had nothing to do with security.

Ms Madonsela estimated that future expenditure would bring the total cost of the upgrade to R246m. She recommended in her report released last week that the president pay back part of the public money spent on the non-security items.

"While the public protector does not explicitly state how much President Zuma owes for all the non-security items, the DA has studied her report as well as other documents released by the media and calculated — on a conservative estimate — that the non-security upgrades to his private property could have been worth around R52.8m," Mr Harris said.

The DA calculated the tax owed on the fringe benefit by adding the remaining R42.2m to his annual salary of R2.6m. It noted that any taxpayer in the top personal income tax bracket is liable to pay a 40% fringe benefit tax.

"Our estimate is based only on the cost breakdown provided in public works documentation in March 2011," Mr Harris said. "Since then expenditure is likely to have changed. Furthermore, details of line items like movable furniture are not available to us."

Mr Harris said the R16.8m in fringe benefit tax could build 140 RDP houses, fund 70 students for three-year degrees or pay 93 police officers for a year. Further, the money could pay 86 nurses for about a year.

The DA has also called for the impeachment of the president and laid criminal charges against him.

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