Gupta-linked R100m VAT scandal: We need answers from Nene - DA

Cape Town - The DA is seeking to test the legal extent of the Tax Act dealing with disclosure limitations following a report that the Guptas have been implicated in a R100m VAT scam.

Fin24 sister publication Rapport reported on Sunday that Oakbay Investments, the Gupta family’s parent company, is one of many entities implicated in defrauding the SA Revenue Service (SARS).

• READ: Guptas linked to R100m VAT scam

The false claims amount to about R100m, of which about R30.5m was paid out, according to court papers filed in the North Gauteng High Court in Pretoria.

In its provisional charge sheet, the state alleges that the “manager” of the scheme, Ridwaan Joosab, “distributed” the money that Sars paid out through 38 entities or individuals to disguise its origin.

Nine people from up-market neighbourhoods in Centurion and Durban have already been arrested. But Oakbay is not an accused in the matter.

"Whilst SARS was putting jobs at risk by delaying VAT refunds to small businesses, it now appears that SARS simply seems to have overlooked, perhaps deliberately, fraudulent VAT claims in the region of R100m submitted by Gupta-linked, and suspiciously very wealthy, persons," DA MP Alf Lees said.

The scam indicates that the SARS systems are either not working or have deliberately been subverted by insiders at SARS, he said in a statement issued on Sunday.

The DA will write to the Chairperson of the Standing Committee on Finance, Yunus Carrin, to request that the parliamentary legal services provide the Committee with an opinion on possible limitations to the disclosure limitations as contained in Chapter 6 of the Tax Administration Act No. 28 of 2011.

• READ: SARS woes bode ill for good governance

"The DA will now find a way of testing the legal extent of the disclosure limitations of Chapter 6 of the Tax Administration Act No. 28 of 2011 that prevent the details of seemingly fraudulent tax matters already in the public domain being made public," said Lees.

"It took the DA years of pushing and finally the Tax Ombud to expose that SARS were deliberately manipulating delays in the refunds of VAT and other taxes of relatively small amounts that were putting small businesses in jeopardy or in some cases, out of business."

Lees expressed little hope that National Treasury would shed light on the matter.

"There will no doubt be the standard SARS response about taxpayer confidentiality when we raise the reported R100 million fraudulent VAT refunds with the Minister of Finance, Nhlanhla Nene, but we would fail in our constitutional responsibility if we do not raise it."

• READ: SARS criminal unit looks to stem rising tax fraud

Meanwhile, Fin24 sister publication City Press reported on Sunday that SARS wants to increase the number of fraud cases it finalises and hands over to the National Prosecuting Authority (NPA) for criminal prosecution, to stem the rising tide of noncompliance.

In the 2018 tax year, the unit finalised over 429 cases. They were mainly related to VAT or pay-as-you-earn (PAYE) tax.

SARS spokesperson Sicelo Mkosi said VAT fraud was largely committed by criminal syndicates that "scammed the system" by using shell entities.

"Company income tax and PAYE are paid by more or less registered entities and there is some level of compliance," he said.

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