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SARS clamps down on illicit traders who are dodging billions in tax

| Economic factors

SARS Commissioner Edward Kieswetter has committed the revenue collector to work closely with other government agencies to stamp out illicit trading plaguing various sectors.

“The losses in tax revenue and the negative impact on our domestic economy affects industries, erodes employment opportunities and generally denies the most vulnerable in society the social and economic wellbeing they deserve,” said Kieswetter on Thursday.

 

SARS, he said, has found that importers and exporters in these sectors are using various ways to avoid paying the import/export duties. The traders are also employing tactics to avoid paying value-added tax (VAT) that applies to the goods, which in turn impacts on the amount of revenue that SARS is able to collect for the growth and development of the country.

“Another negative impact of illicit trade is the erosion of productive capacity in the country, as goods are imported rather than produced locally. This in turn leads to job losses, which aggravates already high levels of poverty and inequality.

“That is why the clothing and textile industry, in particular, is a key focus area for SARS,” the Commissioner said.

Under-declaration of customs value in this sector has increased from R5.2 billion in 2014 to R8.52 billion in 2018, with the under-declared customs value in 2017 and 2018 representing 34% and 35% of the declared customs value respectively.

The revenue collector said some of the cases of non-compliance that customs has come across recently in this area include declaring complete garments at values as low as 0.02 US cents; excess cargo; fictitious importers’ addresses and misclassification of goods. In one instance, more than 80% of a container was not declared.

SARS forms part of an inter-agency working group with the Department of Trade and Industry (dti) and National Treasury, focusing on the clothing, textile, leather and footwear industry.

The working group is already seeing a number of successes since it was established last year. Within the first month of the group’s establishment, Customs issued 20 letters of intent to seize goods from traders, who were found to be non-compliant in terms of value, quantity, classification, licensing and registration. The potential loss to the fiscus of these intended seizures amount to about R20 million.

The Deputy Minister of Finance, who will attend the International Customs Day (ICD) event on Friday, has pledged his full support for the important work of SARS in this regard.

A media statement with more information will be released on Friday following the event to be held by SARS to celebrate International Customs Day.

SARS will this weekend celebrate International Customs Day this weekend by honouring the men and women in its Customs division.

“Whilst the core focus of Customs offices is to manage ports of entries, and facilitate travellers and traders, sadly there is a proliferation of illicit and criminal activity that requires Customs to remain vigilant in combatting this scourge,” said SARS.

It is estimated that illicit trade results in losses to the fiscus of billions of rands every year.

 

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