Ramaphosa pledges all the support SARS needs to fight illicit trade

Efforts to combat the growing illicit economy were highlighted by President Cyril Ramaphosa during a walkabout at the National Command Centre of the South African Revenue Service (SARS) on Thursday.

It's a challenge that's consistently in the headlines, with outgoing SARS Commissioner Edward Kieswetter saying recently that more needs to be done for government to start winning the war against illicit trade.

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After being given a demonstration of the work that the revenue service does, Ramaphosa expressed astonishment at the extreme range of illicit products and pledged to give SARS all the support they need in this fight.

"This National Command Centre is the engine room of the South African state... It is at the heart of our efforts to build a capable state... and ensures the government resources for the delivery of services... Just know that you are touching the lives of South Africans and we need give you all the support you need."

Stephen Grootes interviews Jashwin Baijoo, Partner and Head of Strategic Engagement and Compliance at Tax Consulting SA (TCSAS).

While the tax specialist acknowledges the great strides made in the transformation of SARS, there is still much more to be done.

Baijoo says the rise in illicit activities underscores the need for agile modernisation including things like e-invoicing, AI-enhanced detection as well as clamping down on goods crossing our borders.

He emphasizes the need for international partnerships to stem the rise of illicit activities and compliance erosion.

"If we look at the latest stats, there were seizures to the value of R6.7 billion - and that's not just cigarettes, that's anything that's basically coming into the country through syndicated tax and customs crimes, and illicit and illegal trade flow."

In view of how entrenched this shadow economy is in the life of the ordinary South African, could the battle against illicit goods also in a way backfire?

This is why SARS has been gradually introducing a segmentation model over the past 12-18 months, Baijoo says.

"On the one side you have your financial crimes, your illicit and illegal trade flows and on the other you've got large international businesses, then your high-wealth individuals... and also now the gig economy and social media economy. Each one has a different compliance model because you can't apply a blanket strategy which may work for high-wealth people or entities looking at profit erosion and think it's going to work the same for the guy that's selling illicit cigarettes on the side of the road."

For more insight on the challenges facing SARS, listen to the interview audio at the top of the article