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South African Tax Man Stresses Integrity Of Tax Refund System

by Lorys Charalambous, Tax-News.com, Cyprus

06 November 2017


The South African Revenue Service (SARS) announced on October 30 that it had paid over ZAR120bn (USD8.4bn) in refunds across all tax types in the last seven months.

According to SARS figures, during the 2016/2017 financial year, its risk detection measures prevented ZAR35bn of unwarranted refunds from being paid.

The tax authority additionally revealed that for the current financial year to date, its risk mitigation measures had prevented ZAR20bn in fraudulent claims across all tax types.

It explained in a statement that: "While SARS is committed to ensuring taxpayers get their refunds, it also has a mandate to avoid revenue loss to the country's fiscus. It does this through a series of risk mitigation measures to detect fraudulent claims and non-compliance." It added: "SARS wishes to acknowledge the frustration that taxpayers feel when they expect a refund and it is delayed. But, the organization aims to implement effective preventative measures to detect fraud and non-compliance."

The tax authority explained that the majority of tax refunds are processed within 72 hours without an audit. With regard to VAT, it revealed that during the 2016/2017 financial year, 89 percent of VAT refunds had been released without an audit.

In the last three years, VAT refund fraud cases investigated by SARS's criminal investigations team related to revenues worth ZAR2bn and were handed to the National Prosecuting Authority (NPA). These cases related to the establishment of fictitious entities and the submission of fictitious VAT invoicing schemes.

With regard to personal income taxes, meanwhile, fraud cases investigated by SARS and handed to the NPA were worth ZAR148m, with a conviction rate of 95 percent for all cases presented and finalized in court.

TAGS: court | South Africa | compliance | tax | audit | tax authority | VAT refunds | Africa | Tax

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