Nedlac partners condemn customs and Vat fraud

A crackdown on customs fraudsters has been called for by the social partners in Nedlac.

Customs fraud results in an estimated R3 billion per annum loss of tax revenue to the fiscus and undermines local industry and, hence, South Africa's industrial-policy and job-creation objectives. The consequences of fraud are being strongly felt in various sectorsincluding clothing and textiles, footwear and electronicswhere thousands of jobs have been lost.

The Nedlac Management Committee agreed on a joint statement that reflects a firm commitment and call to start work against a culture of criminal and illegal conduct, and that strengthens the efforts of the authorities to eliminate this problem.

The statement reads as follows:

"The Nedlac partners - organised business, organised labour, community and government - have expressed concern at the high incidence of customs and value-added tax (Vat) fraud in South Africa. Such fraud has incd the under-valuation of imported goods, forged documentation, the abuse of the import-permit system, the removal of imported goods in transit and false claims on Vat refunds. The incidence of fraudulent activity even appears to be spreading to established South African businesses.

"Customs fraud results in an estimated R3 billion per annum loss of tax revenue to the fiscus and undermines local industry and, hence, South Africa's industrial-policy and job-creation objectives. The consequences of fraud are already being felt in some sectorsfor example, clothing and textiles, footwear and electronicswhere thousands of jobs have been lost.

"Customs fraud is a serious criminal offence and the Nedlac partners support action by the authorities to impose tougher penalties on guilty parties, to improve its investigative capabilities to identify the criminals and to take measures to hasten the processing of cases through the criminal-justice system.

"The social partners welcome the restructuring of the Department of Customs and Excise and its incorporation into the South African Revenue Services (SARS). They note the progress made by the SARS towards results-orientated management. The seriousness of continued customs fraud warrants urgent action on measures to enhance the effectiveness of the SARS.

"Specifically, the Nedlac partners would like to encourage:

• "Coordination between the SARS, the South African Police Services, the Department of Justice and the Department of Home Affairs in investigating and prosecuting criminals.
• "Upgrading information-technology systems to improve data collection and the ability to monitor and cross-reference customs activity.
• "Coordination between the SARS and the Department of Trade and Industry on a cooperation agreement with Southern African Development Community and Southern African Customs Union countries to investigate cross-border trade irregularities.
• "The implementation of the 13-point plan for the restructuring of customs and excise functions agreed by the social partners in the National Economic Forum.
• "Ongoing criminal prosecution of offenders, including, where appropriate, the executives of guilty companies, with stiffer penalties, including imprisonment."