Meshack Mpapadima Makofane handed himself in at the Hawks’ office accompanied by his legal representative and was initially charged.

It is reported that between November 2017 and January 2018, Makofane and his co-accused, Elias Oman Magheje (51), through their Cape Town based construction company, Machembe Construction and Projects CC, submitted fraudulent value added tax claim invoices to the South African Revenue Service (SARS) via e-filing.

Following SARS’ internal analysis before approximately R9.9 million was transferred to the company’s bank account, authorities noticed that the submitted documents were fraudulent.

The matter was reported to the Hawks for investigation which resulted in a warrant of arrest issued against the alleged perpetrators.

Magheje was arrested in February this year and later released on a R30 000 bail by the Palm Ridge Specialised Commercial Crimes Court.

Mokofane appeared in the same court yesterday where he was granted a R15 000 bail.

Both accused are expected back in court on 29 June 2022 for docket disclosure.

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During the period between 2013 and 2020,Fabiani Ali on numerous occasions furnished the South African Revenue Services (SARS) with fraudulent information on his Value Added Tax (VAT) 201 returns and on numerous occasions failed to submit IT14 Tax returns and ITR 14 Tax returns for several years. Invoices submitted to SARS were also said to be forged.

The matter was reported to the Hawks for probing which led to his first court appearance on the 10 February 2021, where he was released on a warning. Prior to his court appearance, Ali was on the 20 January 2021 served with summons.

Hawks investigations revealed that Ali prejudiced SARS cash to the value of more than R1.5 million. After a number of court appearances he was ultimately convicted. His sentencing is scheduled for the 23 April 2022.

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South African Revenue Service (SARS) in Kimberley alleges that the main suspect made false entries on Corporate Income Tax returns and Value Added Tax returns between 2016 and 2017. The accused is an accomplice of the main suspects arrested in December 2020. The main suspect is a director of Franti General Trading CC, Mamontobatsi Gloria Sebolecwe. The accused assisted with false submissions to South African Revenue Service resulting in an actual loss of R415 000.

The matter was reported to the Hawks for further probing and the suspect was summoned to appear before Kimberley Magistrate Court on Thursday, 17 February 2022.

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It is alleged that Nomesi as the director of the company submitted South African Revenue Services (SARS) Value Added Tax (VAT) returns for the period between September 2012 and November 2015 in respect of which a nil consideration was declared as he claimed that he was never in business during that period whereas he was involved in numerous businesses with different municipal offices and departments in the Eastern Cape.

From the businesses he was involved in, it is reported that a sum of more than R19 million was paid into his business account of which just slightly over R2,4 million was supposed to be paid towards VAT but he never did.

The matter was reported by SARS to the Hawks for probing and that culminated into the arrest of Nomesi and his company yesterday, 18 May 2021. The matter was remanded to 31 May 2021 for a plea.

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The group is scheduled to appear in the Cape Town Regional Court on 29 April 2021 on fraud charges after they allegedly submitted false and fraudulent tax returns to the South African Revenue Services (SARS) on behalf of their clients.
The director who is an Accountant, allegedly submitted fraudulent tax return claims for the period 2011 to 2018 which resulted in SARS losing more than R488 000.00.

Meanwhile, in a separate but related matter, a 50-year-old suspect is expected to appear at the Bellville Regional Court on 13 April 2021, after he was served with a summons to appear before the court by the same team. This also on charges relating to misrepresentations made to SARS on Value Added Tax (VAT) returns where the receiver of revenue suffered a loss of more than R10 million.

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Value Added Tax (VAT) was introduced on 30 September 1991 at 10% and increased to 14%  on 7 April 1993.

The VAT system comprises three types of supply

Standard-rated supplies – supplies of goods and services subject to the VAT rate in force at the time of supply

Exempt supplies – – supplies of goods and services subject to the VAT rate in force at the time of supply

Zero-rated supplies – supplies of certain goods or services subject to VAT at zero percent. The following are amongst others specifically zero-rated brown bread maize meal stamp mealie rice dried mealies dried beans lentils pilchards (excluding pet food or sardines supplied in tins) milk powder (unflavoured) dairy powder blend rice fresh vegetables (excluding canned bottled and dehydrated) fresh fruit vegetable oil used for cooking (excluding olive oil) milk including long-life milk (excluding condensed flavoured sweetened and evaporated milk) cultured milk brown wheaten flour raw eggs pod vegetables diesel petrol and illuminating paraffin. Export sales and services are zero-rated subject to specific requirements.

VAT input tax credits may in general not be claimed in respect of entertainment and sedan and double-cab type motor vehicles

All fee-based financial services are subject to VAT from 1 October 1996 with the exception of

premiums payable in respect of life policies issued in terms of the Insurance Act and contributions to pension provident retirement annuity and medical aid funds and

compulsory charges built into the selling price of units in unit trust schemes

REGISTRATION REQUIREMENTS

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VAT is levied on all supplies made by registered vendors in the course or furtherance of their enterprises. Only a registered vendor may levy VAT. A vendor making exempt supplies or who is not registered may therefore not charge VAT and may not claim back any VAT borne by the enterprise. A vendor that makes taxable supplies of more than R150 000 per annum must register for VAT. If a vendor makes taxable supplies of less than R150 000 per annum he she is not obliged to register as a VAT vendor but may nevertheless apply for voluntary registration.

When a registered vendor is supplied with goods or services by another registered vendor the supplier of those goods or services will levy VAT. A vendor subtracts his her input tax (VAT borne by him her on the acquisition of goods and services) from his her output tax (the VAT charged by him her on the supply of goods and services). The difference is VAT payable to the Receiver of Revenue. The effect of this is that VAT is borne by the end consumer of goods and services.

Items subject to the zero-rate

The following goods and services are subject to VAT at the zero rate

Goods exported from South Africa
Brown bread
Brown wheaten meal
Maize meal
Samp
Mealie rice
Dried mealies
Dried beans
Rice
Lentils
Fruit and vegetables
Pilchards and sardinella in tins or cans
Milk cultured milk and milk powder
Cooking oil
Eggs
Edible legumes and pulse or leguminous plants
Dairy powder blends
Petrol and diesel
Certain supplies made for farming agricultural or pastoral purposes provided that certain requirements are met
Certain gold coins issued by the S A Reserve Bank (including the Kruger Rand)
International transport
State subsidies and donations to welfare organisations
Transfer payments made by public authorities to vendors
Services supplied outside South Africa.

A zero-rating implies that VAT at zero percent ( ) Is levied on supplies and all VAT borne by the vendor for purposes of making such supplies is claimable as an input tax deduction.

The following goods and services are exempt from VAT

Passenger transport by road and rail
The rental of residential accommodation
Educational services in creches nursery schools primary and secondary schools after-school centres universities and technikons
Interest pension and life insurance benefits
Medical services and medicines supplied by State and provincial hospitals and local authority clinics

The supply of any goods or services by an employee organisation to its members to the extent that the consideration consists of membership contributions.

An exemption implies that the supplier of services bears VAT on its purchases but does not levy VAT on its supplies.

Tourists diplomats and exports to foreign countries

Tourists

VAT borne by foreign tourists may be refunded by the VAT Refund Administrator (VRA) upon departure from South Africa. The tourist must be in possession of a tax invoice and have the goods available for inspection upon departure from the RSA. A small commission is levied by the VRA for processing the refund.

Diplomats

Tax relief is granted to certain diplomatic and consular missions in the form of a refund of VAT borne on official purchases. Where a vendor supplies movable goods and consigns or delivers the goods to a recipient in an export country he she may apply the zero rate.

If a non-resident or a foreign enterprise purchases goods in South Africa and subsequently exports the goods the VAT may be refunded by the VAT Refund Administrator. In certain circumstances the vendor may apply the zero rate where the goods are exported by rail sea or air provided the vendor obtains proof of export as required under the Export Incentive Scheme.

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