June 26, 2018 / 4:38 PM / 5 months ago

South Africa starts tax service inquiry after revenue shortfall

FILE PHOTO: South Africa's President Cyril Ramaphosa speaks after his meeting with Britain's Prime Minister Theresa May in Downing Street, London, April 17, 2018. REUTERS/Hannah McKay/File Photo

JOHANNESBURG (Reuters) - South Africa began an inquiry into tax administration and governance on Tuesday after allegations of misconduct by the suspended head of the South African Revenue Service and its failure to collect as much tax as expected in recent years.

President Cyril Ramaphosa, who replaced Jacob Zuma as head of state in February and has promised to crack down on graft, established the inquiry in May saying it was a priority to shore up the revenue collection agency, known as SARS.

The inquiry aims to investigate the revenue shortfalls seen in the last two fiscal years, as well as the unauthorized payment of bonuses to top executives and the withholding of refunds to ordinary tax payers.

Retired Judge Robert Nugent, who is heading the inquiry, said there were many allegations about SARS that had brought the organization into disrepute.

“There are certainly some things of concern that we will be inquiring into,” Nugent said.

Tom Moyane, the suspended head of SARS, is facing disciplinary charges related to alleged misconduct during his tenure. He denies any wrongdoing.

Former SARS commissioner Pravin Gordhan, currently public enterprises minister and a former finance minister, was the first to testify at the inquiry.

Gordhan, who headed SARS from 1999 to 2009, briefed the inquiry on the measures implemented under his leadership to improve efficiency at the revenue service.

South Africa’s revenue gap was 48.2 billion rand ($3.57 billion) in the 2017/18 fiscal year that ended in March. The Treasury has said the shortfall is expected to continue in the medium term.

Reporting by Olivia Kumwenda-Mtambo; Editing by James Macharia and Catherine Evans

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