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Report to allow criminal prosecutions by Sars at ‘advanced stage’

Will be finalised within the next two months.
Retired judge and now consultant to Sars, Dennis Davis ‘would prefer people to pay their taxes’. Image: Supplied

A report compiled by prominent members of the Davis Tax Committee, among others its chair, is at an advanced stage and will be finalised within the next two months, paving the way for criminal prosecutions of tax evasion by the South African Revenue Service (Sars) itself.

This will put South Africa on a par with other jurisdictions where revenue authorities have the power to do their own prosecutions, thereby expediting serious tax evasion cases.

The report, compiled by retired judge Dennis Davis and fellow committee member Thabo Legwaila, will consider legislative amendments to existing laws that may be obstacles in the way of providing Sars with investigative and prosecutorial powers.

Their report will be considered by the full committee before recommendations are passed on to the minister of finance. This may take time.


Davis said in an interview with Moneyweb that SA is looking at the National Prosecuting Authority (NPA) under the leadership of Shamila Batohi to hold “all crooks” accountable.

However, he pointed out that tax is a very specialised area – and the NPA has a lot on its plate as it is.

The result is that more than a thousand tax cases are currently gathering dust at the NPA.

The aim with legislative changes is to expedite criminal prosecutions of tax evasion.

“I do not want everybody to go to jail. On the contrary, I would prefer people to pay their taxes,” Davis said.

Read: Tax evaders should face jail time to curb rising non-compliance – Judge Dennis Davis

Deterrence factor

If a few high profile cases of particularly egregious forms of tax evasion can be successfully prosecuted, the deterrence factor will be enormous.

“You cannot justify people going to jail for stealing potatoes from the supermarket and a person who is engaged in a massive value-added tax scam gets off scot-free.”

Davis acknowledged that Sars will need to be “capacitated to some extent”, but since the entire inquiry into tax evasion is already done by Sars, it stands to reason that if it can conduct the prosecution it will take a lot of pressure off the NPA.

Davis has been appointed as a consultant at Sars for a year, with the option to renew his contract. The first “item on the agenda” is closing the tax gap – the amount of tax that is due to the fiscus and the amount that is actually paid.

There is no doubt that there has been a decline in tax morality and that taxpayers are “deeply suspicious” of Sars. This is mainly due to the devastation of the agency during the time when Tom Moyane was at the helm.

Sars abuses wide powers of debt recovery (May 2020)
Sars, have you taxed that Aston Martin? (September 2020)
Sars – can a leopard change its spots? (October 2020)
Sars puts through a sneaky change (February 2021)

Tax morality

The magnitude of corruption and downright theft of taxpayer money unveiled at the Zondo Commission of Inquiry into Allegations of State Capture undoubtedly impacted tax morality in the country.

It may recover if South Africans see that their hard-earned money is no longer flushed down the “corruption toilet”, said Davis. If everyone pays their fair share it is possible that the country and its institutions will be able to undergo desperately needed reconstruction.

Sars has lost some of its best-skilled people, but has been on the road to recovery since Moyane was replaced by acting commissioner Mark Kingon and with the subsequent appointment of Edward Kieswetter as commissioner. Its ability to – for the first time in years – exceed the revenue targets set by National Treasury is testimony to a significant recovery, said Davis.

“I am not suggesting for one moment that Sars as it is presently constituted has all the necessary skills, but the foundations are there. All you have to do is supplement them.”

After only one week at the revenue service he has been struck by the “extraordinary dedication” of civil servants who aim to make the organisation the best they can.

Balancing power

Davis believes the extensive powers bestowed on Sars in the Tax Administration Act (TAA) are necessary. However, when it comes to relatively small matters of tax collection he believes Sars needs to be more “user-friendly” by reducing red tape and ensuring that these issues do not land up in tax courts.

“It is totally ridiculous for an ordinary taxpayer to have to incur huge amounts of legal cost to deal with small matters. I understand that perfectly, but what do you do when you discover second-hand gold VAT fraud that runs into billions of rands? You would want legislation that will allow your tax authority to collect it.”

Davis is alive to some of the practices at Sars that have frustrated taxpayers and believes they need to be fixed.

The Davis Tax Committee has recommended the strengthening of the Office of the Tax Ombud to counter the powers bestowed on Sars in the TAA.

He is also in favour of the introduction of a Taxpayer Bill of Rights into legislation, but the country now has “bigger problems” where “significant amounts of rands” need to be collected.

That is his priority. Tax rates will remain where they are, or there might even be room to lower them if Sars collects what is due.

Read: Sars to crack down on tax avoidance schemes

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One wonders sometimes if it is not worth earning a bit less to lower ones tax bracket? Or perhaps emigrating to a country with lower tax brackets. Sell your Lamborghini and voertsek out of this country?

Did you think through your first question? It only makes sense if the tax rate is 100% or more.

Doesn’t have to be a 100%. But let’s think about this carefully as you suggested.

The max you can pay is 45%, which means you go almost 50/50 with the government on your income.

Is 45% the only tax you can pay? No! You still have to pay 15% on VAT, fuel levy and all sorts of other taxes.

Does this sound like little tax to you?

I get what you are saying and every Tax payer must find all the methods to exploit the system so that they pay the minimum required or like you said leave.

The State is acting like an alcoholic in a bottle store, they are not looking at stopping their addiction nor are they able to comprehend that the destruction is a direct result of their attitude and behaviour. Because if they were concerned then they would not be in the bottle store in the first place… No amount of revenue will solve this problem, if anything more revenue will allow for greater exploitation of the taxpayer.

The ANC deems it fit to call out citizens for their error but they are completely delinalists when it comes to their own shortcomings. As many have and will state, no arrest nor any payback has and or will ever occur.

I have also been thinking about it.

Rather earn less and have less Tax Admin!

Here is a better thought, first get all the money stolen by the ANC leadership over 26 years and take your charges to them and then come talk to us ordinary South Africans about tax and criminal charges. Start with the leaders!

it just shows again the double standards of the country we live in – chasing small fry but, whilst the anc government was / is the main looter for the past 20+ years, but to date absolutely nothing happened to / anybody guilty is in jail yet – they know where to look for tax income, as long as it does not effect themselves with hot money in the back pocket

I agree. How about Hamilton Ndlovu and Shawn Mpisa?????
And then all the PPE and State Capture and general Corruption ripping the a#$rse out of us!!!

If they can fix the potholes, every other problem will easily be solved.

You talking about the road potholes or the pothole that every corrupt cadre is.

It boggles the mind that these fools sees the elephant in the closet but moves no finger to get it out – only lip service. They can change legislation as much as they like, when no one gets prosecuted for corruption,the capable ones will continue to emigrate and the tax base will continue to shrink. Insolent fools!

Wow – the Ferrari drivers must be trembling now ne !!

And the Porsche drives are right behind them…..followed by the Bentley “Boys”. HaHaHa

And followed shortly by every other hardworking desant professional south african.

“Madam” at the NPA is still building capacity.


Just more cadre deployment and there to protect Cyril and his elite faction.

and I suspect Davis and his fellow apparatchiks sense Batohi’s incompetence and weakness so are taking the opportunity to develop their own personal shakedown service. Probably straight out of a soviet system; Africanised.

Ja but she ticks all the right politically correct ANC boxes and she was a tiger when she faced the poor late Hansie who was easy meat.

If you look at cause(what cause the taxpayers to shy away from paying tax) and effect(less money for developing SA/ less money for maintaining SA, as politicians will still spend whatever they can get), you should address the actual root cause first.
1)Tax payers see their money being spend by politicians on everything(luxury holidays, houses, cars, 5star dinners, parties, protest/ lobbying to suit their cause or when they are being exposed), but the country
2) when they do spend it on the country, the amount of corruption is staggering
3) show me politicians that go to jail for “lack of tax paying”
4) lots of limitations for working south africans & companies with all the rules and regulations (currently- lockdowns/ BBBEE…)

Sort out your politicians first and you will see the rest of SA will fall in line by voluntary paying tax

Agree with your solution that politicians and their ecosystem need scrutiny, but don’t agree that this will result in rest of SA falling into line. Anecdotally, tax evasion is a serious criminal business, not unique to South Africa, and not all of which is part of the political ecosystem.

Also when people pay less tax they spend the money in the real working economy boosting tax paying companies that grow and need to employ more people that can pay more tax??? It snowballs!!

Talk about shortsighted?? Unfortunately these anc idiots have not got the brains to make anything work. To destroy?? Is built in.

More teeth to bully law abiding citizens, yet the cash industries like the taxis, house building and illicit cigarettes and booze remain untouched. SARS is simply too scared to go after these guys and do lifestyle assessments. However, if your VAT return is one day late, it is a 10% immediate penalty.

Better to stop the criminal outflow of tax money before you worry about the inflow ! I can very well imagine that the ongoing theft and insane waste of tax money by the ANC cadres dampened the enthusiasm of ordinary tax payers to continue to support these practices. If the corruption is not stopped and previous and present culprits not jailed the number of able and willing tax payers will shrink some more.

“The Davis Tax Committee has recommended the strengthening of the Office of the Tax Ombud to counter the powers bestowed on Sars in the TAA.”

There should be a lot of under utilised legal people available from the Road Accident Fund.

Yes. But they might be useless and incompetent, one never knows.

Next step; Also allow Afriforum to do their own prosecutions. Same motivation – the NPA has enough on their plate already.

Davis is a motor mouth and such people seldom achieve anything materially relevant, what’s lacking is implementation – wonder if we will see any prosecutions of note over the next 10 years let alone 5 years

Plug the drain before one starts refilling the bathtub!

this may seem counter-intuitive, Dennis, but if your SARS gave substantial tax incentives to taxpayers, rather than chucking them in jail,then maybe you’d collect way more revenue.BTW, what foreign investor would want to invest in a country with draconian tax legislation?Let alone the existing tax base,many of whom likely have access to second passports.

While I understand the frustration and the logic of comments saying people duck tax because of corruption, mis-spending, lack of prosecutions; it is a stretch going from that moral stance to submitting fraudulent tax returns.

A formal, disciplined and organised tax revolt is something very different. PAYE taxpayers have no such ability. Companies cannot withhold the PAYE of their workers as that money legally is not the company’s to withhold. Public companies’ officers would have a legal problem if they want to join a protest on behalf of shareholders by withholding public company income taxes.

One can also say that output VAT also does not belong to the company and not claiming input VAT will have the exact opposite effect a tax revolt hopes for!

That basically leaves provisional tax of private individuals and private companies. It should be possible to file (correct) returns and deposit the funds into a trust established for that purpose and overseen by retired judges.

My averagely salaried, hard-working and highly educated, very prudent with money, daughter and her husband, 30’s, no children, drive a small cheap car, were recently audited by SARS. Through careful money manament they bought an investment one-bedroom, apart from their own modest apartment. The audit found that they “owed” R 5 000″ (could not claim expenses) because they “had not charged a market related rent”. Yes, SARS can apparently determine that too! Fighting would cost more in tax practioners’ fees. Ridiculous going after pennies while the real crooks run free. So they voted with their feet- sold everything and emigrated, with our full blessing.

When we look for crooks, let’s start with some of those retired judges who, whilst receiving a full salary for life, organise little side-line ventures for themselves like, for example, arbitrations with their arbiter’s fees paid not into their own Bank account, but direct into their wife’s accounts or into other strange little trust accounts; then move to property purchasers like the mid-level Government employee who put in an offer to buy my house for cash, paid by a company of which he is not a director, and with the ownership of the house to be registered in the name of his brother, a Mamelodi taxi driver; then move to that purchaser’s estate agent who tried to broker the deal and his attorney who received and held the purchase price in his trust account, and issued a guarantee for the payment – with both of these “professionals” refusing to report an obviously suspect transaction under FICA, and who insisted that the source of the money and the identity of the registrant is no concern of ours. And then I am not even getting to the car salesmen who receive bags of cash from purchasers in payment for luxury cars, which are then registered in the names of third parties. I am afraid that when all the crooks are rounded up and incarcerated – from the potato thief to the Gupta gang – the sheer number will require the entire South African land mass for incarceration with the remainder banished to Marion, Bird and Robben Islands. COVID contagion has nothing on corruption and thievery – just look at where we are now since those glorious days in which Mandela saw fit basically to excuse the parliamentary Travelgate thieves. But he was then probably at the horns of a dilemma; if he had acted decisively and had them “stood aside”, parliament would overnight have been denuded of parliamentarians.

Please audit Julius Malema and Floyd Shivambu. I just want to see something.

They were – On Point Engineering. And that R16m miraculously disappeared. Guess it pays to play on both sides of the fence – Join a radical political party (RPP) and become an MP and then play CEO of many trusts. Scoop said cash from both sides – and make tax issues disappear.
Guess only this can happen in good ol RSA Inc. where any goes. Including the Hon Min Juliuuuuus interviewing Judges whilst he is the subject of various Court hearings. Just blows my mind.
That would be like giving Trump the keys to the Constitution so that he can Prezzie For Life – like his mate Comrat Putrid………

Misguided antagonism towards a man that’s been a politician for only 5 years of his life whereas the current president by his own admission joined the senate 120 years ago.

“The greatest dangers to liberty lurk in the insidious encroachment by people of zeal, well meaning but without understanding” Judge Louis Brandeis

Just because something is law, does not make it morally right. Just look at the crimes committed by governments against thier own people in the past 100 years, by armies of zealous clerks and low level goverment officials who have the full backing of state sanctioned laws and violence. The term, “The banality of Evil” springs to mind. Anyone who still believes in “Checks and Balances”, please contact me, as man, have I got a deal for you.

I guess you are referring to the GauvaMent trash in ANC running us into the ground

Judge Denis Davis is promoting emigration.

‘to hold “all crooks” accountable’. Yeah, right. Perhaps the good judge is not comprehending that over R1tn is missing thanks to ANC looting. Why not address the hole in the bucket before filling it with water (ie revenue)?
South Africans have been robbed, and to seek more revenue from the public serves a) to remove the focus of attention from the looters, and
b) creates more revenue to be mismanaged.

Is this difficult to comprehend? Perhaps the good judge can update the public with how many pennies the Zondo Commission has clawed back, and which fat cats have been sent to jail.

This squeaking former judge is really not up to the role.Look what Putin did in Russia-15 tax-not worth evading. Put up taxes on luxury goods so collection is outsourced. Easy and cheap to collect VAT certainly compared to income tax from clever HNWI or even smarter corporates.

The man is not up to the job-The Netherlands and Switzerland has a wealth tax but no CGT.

He is simply angry at not being SCA/CC material and needs to make a name for himself.

Let me digress a little. What most people are not aware of is the many ways that the government surreptitiously slips in additional tax burdens on it’s citizens. One instance: When importing goods the container now goes though an electronic screening system – which is charged for to the importer. Containers are routinely stopped supposedly for further inspection incurring thousands of rand in demurrage – which is charged to the importer. The amazing Rob Davies, yes that communist who was our last minister of Trade and Industry (notice any incongruity) introduced (without notice) a requirement for imported electrical goods to have a ‘LA’ – Letter of Authority. This requires sending the said goods for testing to meet our SA standards regardless of the fact that the goods already carry the highest international certification standards. This process usually takes at least 6 months while the container is stranded at high storage costs – payable by the importer. Then there is the cost of the ‘LA’, which has to be renewed every year – at the importers cost. The destruction of our economy is the only theme constantly in play. The idiocy of our unqualified, uneducated and inexperienced politicians is only matched by the academics who advise them.

What this tells us is that it is far better to earn less money in this country because if you earn more, you may end up in prison while the politically connected looters will continue to walk free.

Also, it may be better to just leave this country and go to a tax-friendly country.

End of comments.





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