SARS says politicians and leaders should open up their tax affairs
The South African Revenue Service (SARS) says president Cyril Ramaphosa and his Phala Phala farm are tax compliant – for the first time in South Africa’s history exposing the tax affairs of a president.
On Tuesday (7 March), SARS said it received written consent from the president to make a statement related to his tax affairs, after a previous statement from the taxman gave credence to claims he was involved in dodgy dealings.
The revenue service this week responded to a Promotion of Access to Information Act (PAIA) request from the Democratic Alliance (DA), seeking confirmation of a record for a US$580,000 transaction made concerning cattle being sold.
The transaction – related to the Phala Phala farm scandal – has become the lightning rod for several investigations into the president and allegations of misconduct from his political opponents.
The transaction is at the centre of a scandal that has hit Ramaphosa’s credibility hard in the last year. The money, or part thereof, was reportedly stolen from the president’s Phala Phala game farm in 2020 but not formally reported to the South African Police Service.
The incident raised many questions – including the origin of the money, whether it was lawfully declared when it entered the country, and why necessary procedures were not followed when the money was stolen. Ramaphosa’s political opponents, both within the ANC and outside the party, have leaned heavily on the incident to try and topple the president.
According to the DA, Ramaphosa claimed that he had received the US$580,000 from Hazim Mustafa, a Sudanese national, as payment for cattle as part of a legitimate business transaction.
In turn, Mustafa claimed in a media interview that he had complied with the requirement to declare the money to SARS officials at OR Tambo airport upon entering South Africa.
However, SARS said that its business units could not track the information down – noting that it “could not be found and/or may not be in existence.”
Using the response, the DA declared a major victory, saying this was proof that the president had hidden the money, “which had entered the country illegally”, and had likely “been in possession of these dirty dollars for a corrupt, illicit or criminal purpose”.
However, just one day later, SARS cleared the president and his Phala Phala farm of any dodgy tax practices, saying both were compliant with the relevant tax laws.
In a first for South Africa, the president allowed his privacy rights related to tax affairs to be breached, allowing SARS to state this publicly.
“Mindful of the considerable public interest and concern in the affairs of the taxpayers Mr Matamela Cyril Ramaphosa, Ntaba Nyoni Estate and Ntaba Nyoni Feedlot (Phala Phala), SARS has received the consent of the taxpayers…to make a public statement,” it said.
“To date, audits have been concluded without any adverse tax findings. SARS wishes to confirm that the taxpayers are compliant with their tax obligations to date.”
SARS said that without the taxpayer’s and public officers’ express written consent, it would be prohibited by law from making this statement.
SARS commissioner Edward Kieswetter said that he was at no stage approached by the president, or anyone on his behalf, with any request related to his personal or the business entities’ tax affairs.
He said that publishing the tax information of a president is exceptional – but he encouraged other high-profile office bearers and leaders in society to consider taking the proactive step of doing the same as part of their commitment to transparency.
“This would go a long way towards building confidence in our country’s institutions,” he said.
The notice of compliance for the president is unlikely to make the Phala Phala scandal go away any time soon, however.
Several investigations into the matter as still ongoing, including an investigation by the South African Reserve Bank as to whether the money entered the country in line with forex rules.
The Independent Police Investigative Directorate (IPID) and the Hawks are both investigating the matter. At the same time, the office of the Public Protector has already concluded its investigation, and an interim report has been drafted.
The DA has submitted the original affidavit from SARS to be part of the Public Protector’s investigation.
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