Sars detects billions in fraudulent claims from taxpayers

The South African Revenue Services (Sars) said it has detected R30 billion in fraudulent claims from taxpayers.

This was revealed by Sars Commissioner Edward Edward Kieswetter on Thursday, as he unpacked the 2022/23 National Budget presented by Finance Minister Enoch Godongwana in Parliament last Wednesday.

The tax commissioner said Sars has processed almost three and a half million VAT returns in 2022.

Kieswetter said there is non-compliance level because of negligence and that the public deliberately seeks to defraud Sars.

“Three and a half million VAT returns, when we look at that, it has credit returns of R266 billion. If we had to do nothing, we would pay out R266 billion Rand to taxpayers.

“But because we have built a risk fraud detection capability using data, using artificial intelligence, machine-learning algorithms, as well as application of human effort, we were able to detect R30 billion of the R266 billion as would’ve been fraudulent.

“So, in the number the minister announced, there is R30 billion of fraudulent VAT refunds which would not have been there if Sars did not do its work.”

Kieswetter said even individual taxpayers who submitted about 5.3 million tax returns sought to defraud Sars with fraudulent claims.

“We have seen the abuse in terms of home-office claims during this pandemic year and I’ve had to disallow many incorrect or even criminal requests for allowed deductions.

“The value of the 5.3 million returns amounts to about R30 billion credit claims. Again, if we do nothing, R30 billion would flow out. Because we do compliance checks, we raised additional revenue and in this year we prevented an outflow of almost eight billion of fraudulent or impermissible refunds which would not have been in the fiscus.”

Kieswetter said taking into account Sars’ collective effort this year to date in stifling fraudulent claims, it has ensured an additional R144 billion in revenue in the fiscus.

“We have a long way to go, we are far from perfect. We’ll be the first to tell you that the rebuilding of Sars, particularly following the state capture era, we have probably not even reached the halfway mark. We can also tell the minister of finance and the finance director there is still a lot money out there. We are far from a hundred percent market share.”

Kieswetter has urged government to invest in Sars to build its capability because it’s the best way to improve the country’s fiscal integrity.

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