In a plot that could be straight out of a movie, the SA Revenue Service (SARS) has uncovered a tax-dodging racket in which foreign diplomats buy large volumes of alcohol at duty free retailers and sell it locally, cheating the tax collector of an estimated R100 million in taxes every month. This is according to an explosive News24 report.
We know, right? Talk about opportunism. It’s also blatantly illegal. Thankfully SARS has caught on to the scheme and is cracking down. It has identified the diplomats as being from Rwanda, Ghana, Burundi, Guinea and Malawi, and is taking action against these crimes. But it’s not just our African neighbours. Last year authorities said a German diplomat was also spotted buying large volumes of duty-free alcohol.
To explain: South Africans are not allowed to buy from local duty free retailers, which don’t add our country’s taxes to their prices. Diplomats are allowed this privilege, from places set up just for this purpose. But some unscrupulous types have used it to buy pricy alcohol, like KWV for just R70 – less than half of what it would cost at a legitimate local bottle store. They then mark it up and sell it to a local trader who adds their own markup and can still sell it to the public at a lower price than usual. Now imagine doing this to the value of millions of rands.
And of course, we all pay the price: SARS receives less revenue, and government spending is curtailed.
Now SARS is putting in place quotas and other regulations to curtail the problem, particularly if it turns out to be more widespread.
In another positive crackdown, Commissioner Edward Kieswetter said SARS was also looking into the lifestyle of, particularly, individuals to examine their ‘unexplained’ wealth. And they’re looking… everywhere. In one recent case, the tax body noticed a businessman boasting about a new car on social media. His declared income didn’t support him being able to purchase it and an investigation was launched. It gives a whole new layer to those #blessed posts people love to share on social media with their recent acquisition. In another case, SARS noted a bunch of Ferraris parked outside a hotel. Tracing the licence plates, they found the owners had declared a taxable income of just R34,000-00 a month. We don’t know about you, but we wish we could make our money go that far 👀.
It goes to show: you can’t outrun the taxman forever, especially when he’s been hard at work fixing up the house since it was gutted during the Jacob Zuma state capture years.
This article appeared as part of The Wrap, 8 April 2021. Sign up to receive our weekly updates.