How to Report a tax crime
SARS wants to make reporting a tax or customs crime easy for you. An online form was created for reporting tax crimes. Reporting a tax crime is the right thing to do.
Here is what you need to get together before you submit to SARS:
- It’s helpful if you have an ID number; Tax Reference number of the person you are reporting. But it’s not essential. Even a car registration number will help
- SARS will ask you if the crime is about business tax, personal tax or customs
- You can decide if you want to remain anonymous
- The form is simple and easy to complete:
If you want to report a suspicious activity, click here. Or you can call us anonymously on 0800 00 2870.
Important to note is that once you have reported the issue that SARS won't get in touch with you on the progress of the case as they can't discuss anyone's tax affairs with you as this information is private.
You can be assured that your contribution is valued and that the case will be looked into. SARS is prohibited from providing information on the case once it is reported, not even whether it is under investigation or not.
Report a suspicious activity
SARS expects you to consider reporting any suspicious activity relevant to tax. SARS wants to be sure that everyone is paying their fair share of tax in South Africa. Fighting tax crimes is at the top of the list for SARS.
What does SARS consider as suspicious activity
There are multiple methods to cheat on SARS. These methods include lying, tricking, and deceiving. People use these methods to avoid paying taxes or to obtain an unfair refund. We can't talk about every action against SARS in a short discussion as the list is too long.
Many of these types of conduct are no more but variations of the theme.
The examples given help us understand how our laws deal with tax evasion and getting an unfair refund:
Examples of suspicious activities include:
- Where a person is legally obliged to register for tax but intentionally fails to do so.
- Many frauds involve the making of false representations in the trader’s books of account. In many instances, the offender will go to great lengths to ensure the entries in their books of account corresponds with their false representations to SARS.
- Making of a false statement or the causation or allowing of a false statement to be made on a tax return have long been one of the most common methods taxpayers employ in evading their tax liabilities and/or obtaining refunds they are not legally entitled to.
- A declaration in a return covers the information as indicated in the return itself and covers the information reflected in the accompanying documentation. Making such a declaration with knowledge or foresight of the information therein reflected to be incorrect will not only amount to a false declaration but will also be a misrepresentation of the truth.
- A tax liability can be misrepresented through the submission of a fraudulent tax return. Defrauding SARS or a SARS official during the administration of the Tax Administration Act through the submission of a fraudulent tax return may be accomplished by inflating or exaggerating the deductions or input taxes a taxpayer is entitled to; and/or under-declaring income or output taxes.
- The submission of ‘nil-returns’ or returns purporting that no trade was carried out, e.g. that a company was dormant whereas it did in fact trade, will also be fraudulent.
- The failure to disclose specific facts or circumstances on which the taxpayer can be assessed at a higher amount. An example of this will be the failure to disclose in their tax return certain investments, employment or business operations, etc.
- Claiming a tax deduction, when at the time when it was claimed is not, in fact, a legitimate claim will be unlawful. Misrepresentations that may be employed in claiming a deduction to which the taxpayer is not legally entitled to are many. Most of these misrepresentations will generally fall within either of the following categories:
- The claiming of false deductions. Typical examples of this will be to claim as business expenses salaries paid out to non-existent employees or to claim for VAT input tax where the goods and services were in fact not acquired
- The claiming of non-deductible expenses as deductible expenses. A commonly used example is the declaration of private expenditures as business expenses
- Double deductions for the same expenses or inputs.
- VAT refund schemes where a fraudster will set up a company or number of companies they register as vendors for VAT purposes. They then claim back VAT refunds on significant inputs allegedly made to close down the ‘company’ and then disappear with the VAT. These companies actually never trade, and the ‘inputs’ claimed are fictitious. These operations may typically involve: the creation of both ‘supplier’ and ‘client’ traders with fictional directors, employees, and addresses, often in various jurisdictions; the opening of multiple bank accounts in the names of numerous entities; the generation of false commercial documentation and books of account; fraudulent registrations as VAT.
- A person or business legible for any type of tax but not paying any tax.
- An individual or business employs people and deducts PAYE from employees but not issuing IRP5 certificates.
- Imported goods sold on the open market at a price lower than ‘landed cost’ i.e. less than what it would cost to purchase the goods, transport them and pay VAT and duty on importation.
- A person or business legible and registered for any type of tax but not submitting returns required by SARS.
- A person living beyond his apparent financial means – displaying unusually high life-style patterns for a person with similar forms of known income.
- An importer (including a clearing agent) not declaring, falsely-declaring or under-declaring goods upon importation.
- An importer or exporter (including the clearing agent) found to have imported or exported illegal goods (drugs, firearms, explosives, CITE described items, counterfeit goods).
- A person or business having mixed fuel of any kind.
- A person found to carry excess currency in any form while travelling into or from South Africa.
- An individual or business trading in goods suspected of being of counterfeit.
- Derives income from criminal activity.
- A person or business who makes any false statement or entry in a return or other document required by SARS
- A person or business liable to be registered for a tax under a tax Act but is not.
- Customs warehouse irregularities.
- An individual or business failing to withhold and pay to SARS an amount of tax as and when required under a tax Act.
- Transport vehicles with foreign registration numbers transporting shipping containers to and from smallholdings, plots, farms and derelict warehouses under suspicious circumstances.
It is common knowledge now that SARS can already see what is happening on the bank accounts of taxpayers, just because SARS hasn't yet acted doesn't mean they won't. The days of those evading taxes are over, it is no longer a case of if SARS will catch you but rather when.
How the law protects you when you report a tax crime
SARS legislation, by implication, provides protection to people who report tax crime to SARS.
If you wish to report a tax crime to SARS, we will ask you to fill in a suspicious activity report. SARS will endeavour to protect your identity under any circumstance. The only instance where this may change is where your statement or testimony may be required during criminal proceedings.
In such a case, various means to protect your identity exist in law. SARS will engage the National Prosecuting Authority (NPA) with you to ensure these are considered.
Suppose the case affects national security or testifying presents a grave danger to you. In that case SARS will request the NPA to place you in a witness protection programme which the NPA administers.
Suppose you wish to report illegal tax practices that you believe have been committed by your employer or a public institution. In that case you will receive protection as a “whistleblower” under the Protected Disclosures Act. In such a case, please keep in mind that when reporting to SARS, you inform SARS that you are providing the information in terms of the Protected Disclosures Act No, 26 of 2000.
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