The South African Revenue Service says five entities and nine individuals have appeared before the Siyabuswa Magistrates’ Court after coordinated arrests over an alleged value-added tax (VAT) refund fraud scheme that ran to about R4 million, according to BusinessTech.
SARS alleges that false VAT refund claims were submitted through its eFiling system, the online portal for lodging returns and claiming refunds, in the name of an entity. The false returns were filed between June 2016 and June 2020 and caused prejudice to SARS of roughly R3.99 million.
Warrants of arrest were executed in a coordinated operation across Mpumalanga, Gauteng and North West, with support from the Directorate for Priority Crime Investigation, known as the Hawks, and other law-enforcement officials. The accused began appearing in court on 6 October and bail proceedings are continuing.
SARS said the case forms part of a broader national investigation, Project Jan Vas, into an alleged organised criminal syndicate of South African and foreign nationals suspected of targeting the revenue service through large-scale tax fraud. The syndicate is alleged to operate across several provinces, including Mpumalanga, Limpopo, North West and Gauteng.
SARS described VAT fraud as one of the most serious threats to the integrity of South Africa’s tax system. “Fraudulent refund claims divert resources from essential public services, distort fair competition and fuel illicit economic activity that undermines economic growth and development,” it said. The tax authority added that it is working with the National Prosecuting Authority, the Hawks and other law-enforcement agencies to detect complex commercial crimes.
The service pointed to its growing data-analytics capability as a factor in the arrests. In a separate case in September, proceeds of a fraudulent VAT refund scheme were spread across several bank accounts. Working with the banks, SARS detected the transfers, froze the accounts and recovered money directly from them, a process backed by a court ruling on its legality.
Commissioner Dr Johnstone Makhubu said criminals will be caught. “Those who seek to undermine the integrity of our tax system will be detected, investigated and prosecuted,” he said. SARS said it will keep investing in advanced technologies that detect risk and suspicious transactions earlier, while simplifying compliance for legitimate taxpayers.
For more details, see the original report on businesstech.co.za and follow related coverage in the Regulatory & Policy section.
