Eleven convictions as SARS zeroes in on R1bn Covid-19 contracts

The South African Revenue Service (SARS) says it has recovered R170 million in unpaid taxes, following its pursuit of 52 companies that were awarded R1 billion in contracts for Covid-19-related services.

On Friday, the tax authority said the companies received the contracts to supply personal protective equipment (PPE) and other services. 

"To date, 11 companies have been convicted, seven cases are currently on the court roll, 29 cases are with the National Prosecution Authority for the drafting of charge sheets and/or warrant of arrests, while five case dockets are being processed by the Hawks," said SARS.

In addition to the R170 million recovery, R500 million in assets that include cash are under preservation orders. The tax collector is also investigating 33 companies linked to politically exposed people.  

SARS said a number of companies that received tenders with the state to the tune of R50 million had been sentenced for not registering value-added tax (VAT).

These companies received tenders from the Gauteng Department of Education to decontaminate and deep-clean schools, while another received a tender from the KwaZulu-Natal Department of Social Development to provide hygiene equipment and supplies.

"The companies were convicted and sentenced in the Durban District Court last week. The sentences range from five months' to ten months' imprisonment with the option of a fine. The cases follow similar convictions in Gauteng and Free State," SARS said.

In total, the work down by SARS and other entities on these companies resulted in an asset and cash seizure of R41 million.

SARS Commissioner Edward Kieswetter said the tax collector will continue to collaborate with enforcement agencies to ensure tax and customs compliance.

"It seems to be patently obvious that some companies are operating outside the law, seeking to profit from a devastating pandemic that is affecting the lives and livelihoods of millions of South Africans, especially the poor and vulnerable. Sadly, most of the looted funds are being used to finance lavish lifestyles," he said. 

SARS urged vendors to have their VAT in order and to ensure that payments from contracts correspond with the VAT they are meant to be paying.