Specialised divisions within the South African Revenue Service (SARS) are being used to focus on suspected non-compliant taxpayers who benefit from tax evasion and illicit financial flows stemming from wildlife crime.
SARS, alongside other government agencies, including the South African Police Service, the Hawks and the Department of Environmental Affairs, on 24 September, conducted search and seizure operations on 11 different private and business properties operated by individuals who are engaged in tax evasion and wildlife tracking.
SARS said that several arrests were made, and assets and cash used in the criminal operations were seized.
“Tax investigations have resulted in notable successes, including legal recovery, civil proceedings and criminal charges against a criminal syndicate involved in wildlife trafficking, including rhino poaching. The legal actions mounted by SARS against members of the criminal syndicate include sequestration and forfeiture of the proceeds of crime,” said SARS.
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“Wildlife crime and illicit trade by transnational organised crime groups threaten not only our iconic species, like the rhino and pangolin but have a direct negative impact on the South African tourism industry which contributes more than ZAR 268 billion (4.3%) of GDP annually and employs more than 1.1 million people,” said the SARS commissioner Edward Keiswetter.
“Environmental crimes and the illegal trade in natural resources are closely associated with financial crimes like tax evasion, tax fraud, money laundering, illicit financial flow, corruption, drug trafficking, and human trafficking.”
SARS said it plans to enhance its engagement with anti-money laundering task forces as well as Interpol and the Financial Intelligence Centre (FIC).
The taxman has not been shy in addressing financial crime, specifically with regard to non-compliance on the part of wealthy South Africans.
SARS established a dedicated High Wealth Individuals (HWI) task team in 2021 that looks into the financial statements of individuals with gross assets worth R75 million.
The aim of the unit is to detect HWI taxpayers who do not comply with tax legislation and make non-compliance increasingly hard and costly, said Jashwin Baijoo, the legal manager for Africa Tax & Compliance at Tax Consulting SA.
The revenue service has been on a massive drive to uncover the sources of unexplained wealth in South Africa and wishes to bolster its ability to audit and do ‘fishing expeditions’ into the source and history of certain financial transactions.
SARS has also been testing new methods of probing finances, Kieswetter in August said that the service is limited by its legislation but wants to be able to use data to investigate information regarding things such as:
- Luxury properties
- Luxury vehicles
- Beneficial ownership
SARS aims to uncover instances of unexplained wealth by looking at the reported income of a person compared to their expenses and whether such can be explained.
One method being piloted is adapted from the UK, called Unexplained Wealth Orders (UWO). Under such an order, SARS could identify politically exposed persons who hold prominent public functions like ministers or someone suspected of being involved in a serious crime and investigate deeper into their finances.
According to SARS, a court could confiscate unexplained wealth under such an order on the grounds that the wealth of a person or entity is out of proportion to the legal income that person or entity has declared or derived and that the defendant is unable to defend or explain how the wealth was legitimately acquired.
SARS said its departments would be looking into assets suspected to have been acquired through:
- Tax evasion; and
- Money laundering
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