SARS

18 September 2017 – SARS responds to KPMG

PRETORIA, MONDAY, 18 SEPTEMBER 2017:

A) KPMG Conduct

SARS notes the media statement which was issued by KPMG international on the 15 September 2017. The statement includes KPMG International’s action pertaining to among other things, the setting aside of the conclusions and recommendations of the ‘Allegations of Irregular and Misconduct’ report, (Report). 

SARS received an email from Norton Rose Fulbright acting on behalf of KPMG International on the morning of the 15 September 2017, the content of which is attached to the media statement.

SARS has been completely taken aback by KPMG’s aberrant and unethical conduct. KPMG unilaterally announced the purported withdrawal of its report despite the existence of a service level agreement governing the relationship between the parties.

It is important to note the material terms of the SLA which provides that:

1) All rights, title and interest, including all Intellectual Property Rights, literary works created, written and or presented by KPMG and or its agents and employees, which relate to the service performed by KPMG vest exclusively in SARS;

2) KPMG has irrevocably and in perpetuity transferred, made over and assigned to SARS, all intellectual property rights and which SARS has accepted; and

3) KPMG has waived all its moral rights conferred upon it as an author by the provision of Section 20 of the Copyright Act, 1978.

Accordingly, the above contractual obligations confirms that the report belongs to SARS as KPMG has surrendered all rights to SARS. It follows that the Report is an exclusive property of SARS as it constitutes SARS intellectual property.

SARS sees KPMG’s conduct as nothing else but a dismal attempt to portray SARS, its leadership, and in particular SARS Commissioner as incompetent, corrupt, inefficient and involved in a witch-hunt. This is the same narrative that has been perpetuated for years by some treacherous elements within society and the media.

This abhorrent, unethical, and unprofessional conduct by KPMG has left SARS with no option but to consider the following legal route:

1) Instituting legal proceedings against KPMG for reputational damage to SARS including but not limited to a civil claim;

2) Report KPMG to the relevant statutory audit bodies both locally and internationally;

3) Report KPMG to the Minister of Finance with the aim to blacklist KPMG for its unethical, immoral, unlawful and illegal behaviour.

4) Report KPMG to the Minister of Finance to consider stopping all work currently performed by KPMG in other departments as well as any work in the pipeline until all the work KPMG conducted for the state have been investigated and reviewed for quality and proper auditing quality and expected standards;

5) Immediately seize any work which KPMG is currently performing for SARS and assess the work KPMG has performed in the last 10 years with the aim to determine whether there was a value for money and whether SARS should demand its money back;

6) Report KPMG to Parliament through SCOPA and SCOF with the aim to investigate the immoral conduct of KPMG and determine the appropriate action.

B) Disciplinary cases completed and/or underway

SARS has observed with astonishment some former SARS employees and others who have been criss-crossing different media platforms while making unfounded and baseless conclusions as a result of KPMG’s media statement.

SARS wishes to categorically state that the allegations that KPMG report was used as the basis for disciplinary actions as well as the institution of a criminal offence are at best false and at worse deceitful, and aimed at misleading the people of SA.

The following facts and sequence of events attest to the above statement:

1) During the period August 2014, the then Acting Commissioner for SARS, Mr Ivan Pillay Commissioned an Investigation led by Adv Sikhakhane SC with the mandate to investigate allegations that SARS ran a ‘Rogue Unit’. The information was reported by the media then, in particular Sunday Times and City Press newspapers. The claims were amongst others that SARS had a Unit which was not only established illegally but which was illegally intercepting taxpayer’s information and movements;

2) Upon the appointment of the Commissioner for SARS, Mr Moyane in September 2014, the Sikhakhane Commission delivered a report on the 5 November 2014 with serious conclusions and recommendations. Chief amongst others, the recommendations was that indeed SARS ran an unlawful rogue unit, led by and reporting to Mr Pillay as well as some insidious and gross misconduct committed by both Mr Pete Richer and Mr Loggenberg;

3) On the 28 of February 2015 the then Finance Minister, Mr Nene established a SARS Advisory Board, which was chaired by the retired Judge Kroon with the mandate to look into SARS processes with priority being on the investigation and guidance on the Sikhakhane report. It is common cause that the Kroon Advisory Board found that the establishment of the secret unit within SARS in 2007, which covertly gathered intelligence, was unlawful. The Board went further to instruct SARS to charge employees involved and open criminal charge against those implicated in this act of crime;

4) The three employees interalia Mr Johan Loggerenberg, Mr Ivan Pillay, Mr Pete Richer, were charged as a result of the Sikhakhane report respectfully for the following dates 14 January 2015, 5 February 2015, as well as 02 April 2015 respectively. Instead of facing the hearing and clear their names, all of the three opted to resign, with Mr Loggerenberg resigning in February 2015 and Mr Pillay and Ritcher resigning in May 2015.

KPMG report was delivered to SARS late in 2015 and was only made FINAL on the 26 January 2016. It therefore follows that the disciplinary hearings against the above were not conducted as a result of the KPMG report but on the basis of the Sikhakhane report.

Hence SARS’s assertion that those affected are mainly endeavouring to claim innocence or otherwise on the withdrawal of the KPMG report, with others claiming that their careers and careers of others were destroyed as a result of KPMG either grossly ignorant or outright mischievous and or a concerted but dismal attempt to mislead the South African public.

So SARS is calling on those who are unfairly and unjustly accusing SARS of improper conduct on the basis of the KPMG media statement to desist from such conduct.

C) Criminal Case on Rogue Unit and its Activities (Sunday Evening)

SARS has further observed another set of people who are trying hard to claim that the purported withdrawal of the Report by the KPMG automatically vindicates them from their responsibility to account to the alleged criminal acts. SARS places on record that such malicious and irresponsible claims are either some acts of gross ignorance but at worst, a dismissal attempt to circumvent the law and or to mislead the public.

The following sequence of events and activities will demonstrate the above assertion by SARS:

1) In early May 2015, two employees voluntarily demanded to see Mr Moyane as they wanted to make a confession. The two employees informed Mr Moyane about the existence of the illegal and unlawful Rogue Unit. Included in the confession was that they were instructed by Mr Ivan Pillay to install cameras to 12 offices of both the Police and the Scorpions at the time. Further that, the purchase of the equipment were made through R950 000 (Nine Hundred and Fifty Thousand) in cash which was given to them by Mr Gerrie Nel and his colleague. The two were advised by the Commissioner to confess to the police which as far as SARS is concerned, they did;

2) SARS then sought a legal opinion which advised that in terms of the Prevention and Combatting of Corrupt Activities Act, as a person holding a higher authority, he is legally obliged to open a criminal case, which SARS duly opened in May 2014. The case is in the hands of Hawks and SARS hope that the case will be concluded soonest.

As the above demonstrate, KPMG report was handed over to SARS only in late 2015 and made final on 26 January 2016. As this simply demonstrates, this was long after the criminal case was opened and all the necessary evidence was provided to the Hawks and the SAPS.

Given the above facts, SARS is left with no option but to conclude that those who are claiming exoneration from possible and alleged criminal offences, who are expected to be aware of this public facts, can only be attempting to mislead South Africans which SARS finds quite unfortunate.

From the position of SARS, the criminal case whose details is outlined above is in progress and we hope for its speedy conclusion.

SARS wishes to assure all South Africans, in particular taxpayers and traders that 14000 men and women of SARS continues to work tirelessly and selflessly in ensuring that all revenue due to the state are collected both legally and efficiently whilst protecting our borders and facilitating trade as we take South Africa forward, together.

12 September 2017 – SARS Customs intercepts 700 chicken packages at Beitbridge

Pretoria, Tuesday 12 September 2017 – SARS Customs officials intercepted a truck carrying 700 packages of chicken estimated at R711 000 from South Africa to Zimbabwe at Beitbridge border post on Sunday, 10th September 2017.

The incident took place when the foreign registered truck was subjected to a physical inspection after the driver declared that he was carrying only plastic buckets.

The goods and the truck have been detained pending further investigation by the South African Police Service.

7 September 2017 – SARS detector dogs find 2.2 kg cocaine bullets in socks

Pretoria, Thursday 7 September 2017 – SARS Customs and the Detector Dog Unit intercepted 2.2kg of cocaine bullets estimated at R632 000 in a plane from Brazil at OR Tambo International Airport on Wednesday,6 September 2017.

The cocaine was found in two separate toilet compartments on the plane. The first parcel contained 44 bullets valued at R345 240. A further search uncovered a second parcel containing 35 bullets estimated at R287 700. Tests confirmed the white powdery substance to be cocaine.

The interception is a result of the collaborative efforts by SARS Customs, SA Police Service and other law enforcement agencies to fight drug smuggling and other crimes at the airport.

The goods have been handed over to SAPS for further investigation.

Start of PAYE Interim Reconciliation

Special Voluntary Disclosure

Disclose offshore assets and income with SARS before 31 August 2017 to avoid penalties or criminal prosecution,

Trade Statistics

SARS released trade statistics for July 2017 that recorded a trade balance surplus of R8.99 billion due to exports of R93.09 billion and imports of R84.10 billion,

Automated PAYE Disputes

The new automated system will enable employers to lodge disputes via eFiling and electronically at any SARS branch,

eFiling downtime

Due to ongoing maintenance, eFiling will not be available on 19 May 2017 from 18h00 to 24h00. Apologies for the inconvenience.

Trade Statistics

SARS released trade statistics for June 2017 that recorded a trade balance surplus of R10.67 billion due to exports of R102.14 billion and imports of R91.47 billion,

Review of your tax return

If you’ve received a SMS or email from SARS to go to your nearest SARS branch, you will need to take the required documents with you,

Employer Interim Reconciliation

The Employer Interim Reconciliation will open on 15 September and run to 31 October 2017,

Medical Deductions on ITR12

If you experience any issues when completing your Medical Deductions on your Income Tax Return (ITR12), see our tips,

Omission of code 4582

Taxpayers who received IRP5/IT3(a) tax certificates from their employers reflecting codes 3701, 3702, 3802 and/or 3816), may be affected,

Single registration

Allows taxpayers to register, maintain and view associated tax and customs registrations in a consolidated tax profile,

Retirement Fund on ITR12

If you experience any issues when completing your Retirement Annuity Fund contributions on the ITR12, see our tips,

Estate Reform

SARS introduced system changes in respect of deceased estates on 9 December 2016,

New eDNA system

SARS is rolling out a system at our branches where your fingerprints will be captured and authenticated for certain services,

Changes to personal details

If you received a message recently from SARS about changes to your personal details, you need to visit your nearest SARS branch to verify and avoid fraud,

eFiling downtime

Due to maintenance, eFiling will be unavailable on Friday, 20 Jan from 22h00 to Saturday, 21 Jan at 04h30. We apologise for any inconvenience.

31 August 2017 – Trade Statistics for July 2017

Pretoria, 31 August 2017– The South African Revenue Service (SARS) today releases trade statistics for July 2017 recording a trade balance surplus of R8.99 billion. These statistics include trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS). The year-to-date trade balance surplus (01 January to 31 July 2017) of R36.63 billion is an improvement on the deficit for the comparable period in 2016 of R4.70 billion. Exports for the year-to-date grew by 4.4% whilst imports for the same period declined by 2.2%.

Click here for full document.

PAYE Interim Reconciliation

Special Voluntary Disclosure

Disclose offshore assets and income with SARS before 31 August 2017 to avoid penalties or criminal prosecution,

Trade Statistics

SARS released trade statistics for July 2017 that recorded a trade balance surplus of R8.99 billion due to exports of R93.09 billion and imports of R84.10 billion,

Automated PAYE Disputes

The new automated system will enable employers to lodge disputes via eFiling and electronically at any SARS branch,

eFiling downtime

Due to ongoing maintenance, eFiling will not be available on 19 May 2017 from 18h00 to 24h00. Apologies for the inconvenience.

Trade Statistics

SARS released trade statistics for June 2017 that recorded a trade balance surplus of R10.67 billion due to exports of R102.14 billion and imports of R91.47 billion,

Review of your tax return

If you’ve received a SMS or email from SARS to go to your nearest SARS branch, you will need to take the required documents with you,

Employer Interim Reconciliation

The Employer Interim Reconciliation will open on 15 September and run to 31 October 2017,

Medical Deductions on ITR12

If you experience any issues when completing your Medical Deductions on your Income Tax Return (ITR12), see our tips,

Omission of code 4582

Taxpayers who received IRP5/IT3(a) tax certificates from their employers reflecting codes 3701, 3702, 3802 and/or 3816), may be affected,

Single registration

Allows taxpayers to register, maintain and view associated tax and customs registrations in a consolidated tax profile,

Retirement Fund on ITR12

If you experience any issues when completing your Retirement Annuity Fund contributions on the ITR12, see our tips,

Estate Reform

SARS introduced system changes in respect of deceased estates on 9 December 2016,

New eDNA system

SARS is rolling out a system at our branches where your fingerprints will be captured and authenticated for certain services,

Changes to personal details

If you received a message recently from SARS about changes to your personal details, you need to visit your nearest SARS branch to verify and avoid fraud,

eFiling downtime

Due to maintenance, eFiling will be unavailable on Friday, 20 Jan from 22h00 to Saturday, 21 Jan at 04h30. We apologise for any inconvenience.

29 August 2017 – Special Voluntary Disclosure Programme closing on 31 august 2017

Pretoria, 29 August 2017 – The final date for submitting an application under the Special Voluntary Disclosure Programme (SVDP) is still 31 August 2017.

SARS’ media release on 24 August 2017 communicated that the SVDP period would close on 31 August. SARS wishes to dispel any rumour that an extension to the deadline is likely. The closing date is imminent and offers a once-off opportunity to disclose off-shore assets and income with the benefit of SVDP relief.

Taxpayers and advisers are reminded that the SVDP closing date has already been extended twice from the initial date of 31 March 2017 announced in the 2016 Budget. The SVDP closing date was first extended from 31 March 2017 to 30 June 2017 in the Bill introduced in Parliament. Proposals were then made to the Standing Committee on Finance (the Committee) to further extend the SVDP deadline to 30 September 2017. The Committee considered the proposals but only extended the closing date to 31 August 2017 because the automatic exchange of information internationally was, and is still, to begin in September 2017.

SARS is aware that there may be exceptional cases where taxpayers are struggling to obtain off-shore financial information that is required for an SVDP application. To assist these taxpayers to meet the 31 August 2017 deadline, SARS will accept the submission of an application that estimates the values of off-shore assets.

Taxpayers who cannot obtain accurate values on time are urged to submit a SVDP application by 31 August 2017 and include the following with their applications:

 Details of the efforts taken to obtain the financial information

 The date when the information is expected

 A description of the method used to estimate values.

There have been enquiries around the exclusion of taxpayers who have been notified of a SARS audit. Taxpayers are reminded that full SVDP relief cannot be granted if SARS notified the taxpayer of an audit or criminal investigation before the date of the SVDP application and that audit or investigation remains open. SARS does, however, have a discretion to approve an SVDP application even if there is a notification of an audit or criminal investigation. In respect of an application for SVDP relief, SARS must be satisfied that SARS’ audit or criminal investigation would not have detected the taxpayer’s foreign assets or income. SARS must also consider that granting SVDP relief is in the best interest of the good management of the tax system and be the best use of SARS resources.

Taxpayers are once again encouraged to apply for SVDP relief if they have undeclared foreign assets or income. In September 2017 SARS and the tax administrations of other countries will begin exchanging information on an automatic basis. This exchange of information will provide SARS with an international view of taxpayers, and the information will be used by SARS to initiate audits and even criminal investigations. The SVDP gives taxpayers an opportunity to regularise their affairs now, before this happens.

Further information on SVDP can be accessed on the SARS website at:

24 August 2017 – Seven days to go before SVDP deadline

PRETORIA, THURSDAY 24 AUGUST 2017 – There are seven days left before the Special Voluntary Disclosure Programme (SVDP) closes on 31 August and tax authorities set to begin exchanging data on offshore investments automatically.

SARS is appealing to taxpayers with undisclosed offshore assets to use the time available to submit their applications.

So far, SARS has received 606 SVDP applications of which 253 have been processed.  The 253 processed thus far revealed offshore assets to the value of R6.5 billion.

There has been an increase in enquiries as a result of SARS widespread communication campaign and the increased use of the communication line it has established with financial institutions and advisors on SVDP matters. 

SARS is also aware of applications that are in the process of being finalised via its efiling application process and would like to remind taxpayers to submit these on time.  In line with SARS’ experience with previous deadlines, it is anticipated that the number of applications will increase significantly in the closing days of the SVDP window.

SARS is aware that offshore financial institutions are actively assisting their clients to access prior years’ financial information.  Where, in exceptional circumstances, a taxpayer is struggling to get financial information from an offshore institution or otherwise encountering difficulties in obtaining the relevant values of offshore assets, an estimation of the values of these offshore assets may be submitted for purposes of an SVDP application.  In such a case, the application should be accompanied by:

  1. a description of the efforts to obtain the information;
  2. expected date by which the information will be obtained; and
  3. the method used to estimate the values.

This is not an extension of the 31 August 2017 deadline and will be guided by strict conditions and timeframes, which if not honoured, will forfeit the application. 

A total of 101 tax jurisdictions have committed to automatic exchange of information under the new global Common Reporting Standard (CRS).  The availability of this information will expose defaulting taxpayers to full taxation, full interest, no relief from penalties and no relief from potential criminal prosecution. Current lists of jurisdictions that have committed to implementing the CRS are available at https://www.oecd.org/tax/transparency/AEOI-commitments.pdf.

Taxpayers should note that two SARS-related disclosure programmes are running concurrently, which is one of the reasons why the comparison to the 2003 offshore asset amnesty programme, where only one programme was operational, should be treated with caution. 

Taxpayers have the option to choose between the SVDP and the normal Voluntary Disclosure Programme (VDP), depending on which of the two programmes best fits their circumstances.  Taxpayers with offshore assets that were funded with money that was already taxed in South Africa typically make use of the normal VDP.  In such a case the value of the offshore asset would not form part of the SARS statistics, as with the SVDP.

It is also important to reiterate that the SVDP is a joint effort between SARS and the South African Reserve Bank.  People who do not have an undisclosed tax liability in South Africa but who need to regularise their offshore assets with the Reserve Bank only have to apply to the Reserve Bank. 

Thus far, the Reserve Bank has received 943 applications of which 440 have been processed thus far.
As was demonstrated in the 2016 Budget Review, where no revenue was budgeted around the impact of the introduction of the SVDP, it is difficult to anticipate the final number of applications or the final value of disclosures that the SVDP will yield,.
SARS will gain a better appreciation of the extent of offshore assets held from September 2017 onwards when the automatic exchange of information under the CRS commences for early adopters and in 2018 when automatic exchange of information commences for additional jurisdictions.

While the normal VDP process can be used to declare undisclosed offshore assets, taxpayers should still aim to submit these applications before the automatic exchange of information under the CRS commences.

Details of both the VDP and the SVDP are available from the Voluntary Disclosure Programme page on the SARS website.