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Allegations of corruption around tax refunds

by | Jul 25, 2023

Rumours are circulating about corruption around tax refunds, though it’s unclear exactly how this is possible within the current tax administration system.

Allegations of corruption around tax refundsAdministrative delays and poor service delivery in any organisation create fertile grounds for corruption. This is what is being experienced by many government services, where frustrated citizens resort to paying a bribe to get things done.

A small business facing a cashflow crisis due to non-payment of VAT refunds could be tempted to pay someone to expediate the process.

A business owner showed City Press a screenshot of a WhatsApp conversation where someone offered to assist with his VAT refund for a 10% “success fee”.

Using the information provided by City Press, SARS has identified the individual as a former SARS employee and is investigating whether this person has had contact with staff within SARS.

What is not clear is how widespread this corruption around tax refunds is, or what channels these individuals are using to obtain the VAT refunds.

We spoke to several tax practitioners and most said they had not come across the practice. However one tax practitioner said he was familiar with the practice and was aware of another individual who had offered a client a similar service.

Theo Burrows, Secretary General of the South African Tax Practitioners Union says it is not unusual for a tax practitioner to have a contact at SARS that assists them.

“In the industry we all have contacts. It is inevitable. But they are not corrupt. They are just assisting. The concern is that some people may want money in return for helping you,” says Burrows who says that he has not personally come across unethical behaviour, but that there are rumours of this type of behaviour.

He has heard of complaints from tax practitioners who say their clients tell them they have found another practitioner who has been able to get their refunds. “They don’t give names. It’s vague, but they are getting help. There is a sense that all is not above board.”

Stiaan Klue, Executive Dean at The Tax Faculty, says that taxpayers may be more likely to resort to dishonest behaviour when they perceive a failure in service delivery.

“This can be attributed to various factors such as the breakdown of trust, frustration, and a sense of unfairness. When individuals feel let down by the government or believe that the system is not serving their needs adequately, they may be more inclined to engage in dishonest actions as a means of compensating for the perceived shortcomings,” says Klue.

However, commenting on the ability of someone to get a refund approved, he does not believe within the current tax administration system that an individual would be able intervene.

“The operating system within SARS makes it impossible for the taxpayer to know who the auditor is. I am not sure how corruption would be possible unless a rogue SARS official is the cause of the delay and then reaches out to the taxpayer or tax practitioner and offers to expediate the refund for a bribe.”

Johnstone Makhubu, SARS deputy commissioner for taxpayer engagement and operations, says that SARS will take immediate action should it be provided with any evidence of SARS employees accepting bribes.

“It will be handed to our anti-corruption unit and we will not hesitate to act,” he said.

This article first appeared in City Press.

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Maya Fisher-French author of Money Questions Answered

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