SARS is too SOFT on private sector – EFF


The SA Revenue Service (Sars) is failing to collect maximum revenue from the private sector, particular from the mineral resources sector, the EFF said on Wednesday.

The Economic Freedom Fighters made the statement following a Sars briefing to the portfolio committee on finance.Floyd Shivambu

Party parliamentary Chief Whip Floyd Shivambu said Sars claimed easy victories concerning its record on revenue collection.

“We strongly believe that Sars is dismally failing to collect maximum revenue from the private sector,” Shivambu said in a statement.

“The overall contribution of the private sector into the national budget is less than 20 percent, and this is despite the reality that South Africa boasts one of the biggest corporates in the African continent and the world in both the financial and resources sectors.”

He said the tax contribution of all businesses in South Africa was less than R200 billion, meaning corporate tax could not afford to fund the entire education system of South Africa.

“The contribution of the mining sector in the national revenue is less than R25 billion, despite the fact that South Africa is the richest country in the world in terms of mineral resources,” he said.

Shivambu said there were known instances of transfer pricing, base erosion, and profit transfers in the corporate sector but Sars was not doing anything about that.

He accused mining companies of creating subsidiary companies outside the country and selling their mineral resources to themselves at a cheaper rate. He said the move was done to evade tax in South Africa.

“This phenomenon is ongoing in South Africa and even the BEE players in the mining industry are involved in transfer pricing. The corporate sector is involved in massive tax evasion, which most possibly amounts to more than 25 percent of South Africa’s growth domestic product.”

Shivambu said the party would not praise Sars as they did not celebrate mediocrity. He said they would only applaud the revenue service if it could deal with base erosion, transfer pricing, and profit transfer in a cogent and open way.

Party leader Julius Malema has been battling to settle his tax bill. He owes R16m plus interest after failing to submit tax returns between 2006 and 2010.

In 2010 Sars contacted Malema about his failure to submit tax returns. It took Malema 18 months, after many attempts by Sars, to file his outstanding returns.

Malema also failed to register his Ratanang Trust for tax purposes, and Sars had to do this on his behalf. Sars attached some of Malema’s property to recoup the taxes he owed.

In May last year, Malema’s incomplete mansion in Sandton, Johannesburg, was sold on auction for R5.9m — although it was later revealed the bidder could apparently not afford the home.

Malema’s farm in Limpopo fetched R2.5m at an auction in June 2013, and several of his household goods were also auctioned off.

In May he reached an agreement with Sars and committed to remain compliant in future. He also accepted further assessments for the 2011 and 2012 tax years.