The South African Revenue Service’s (SARS) Annual Report, tabled under the cover of darkness late last night, has revealed that SARS allegedly failed to comply with legislation by unlawfully paying R3 million in bonuses to members of the Executive Committee.
The fact that there does not seem to have been any bonus paid to the SARS Commissioner himself would seem to indicate that he was aware of the legal requirement to obtain the Finance Minister’s approval and so stopped short of paying a bonus to himself. Despite this, he went ahead and paid astronomical bonuses to senior executives such as the R930 000 paid to Jonas Makwakwa who is under investigation by the Hawks for possible money laundering.
The DA will now interrogate this non-compliance and question SARS thoroughly when they appear before the Standing Committee on Finance next week Tuesday.
The tabling of the Annual Report missed the Parliamentary deadline of 30 September 2017 because of a dispute between SARS and the Auditor-General (AG) with regard to the payout of these bonuses.
According to the AG, the non-compliance represents a significant internal control deficiency that resulted in material non-compliance. This is because, according to section 18(3) of the SARS Amendment Act, management needs to obtain approval for bonuses from the Finance Minister.
SARS narrowly avoided a qualified audit opinion and this is indicative of institutional decay at the revenue service.
One of the main concerns of the ratings agencies is the weakening of institutions of which SARS lies centre stage. The crisis at SARS only adds to the possibility of yet another downgrade by Moody’s and S&P, who are expected to make an announcement tomorrow.
The continued institutional weakening and scandals that have rocked SARS recently is perpetuating the notion of a Tax Revolt. This is the last thing that we need in South Africa given that we are already facing a R50.8 billion revenue hole.