SARS stamps out smuggling

SARS spokesperson, Tasneem Carrim says that SARS aims to focus on industries where its business intelligence research indicates the presence of illegal activity: "The campaign is focusing on a variety of industries including tobacco, alcohol, textiles and footwear, sweets and confectionaries, cellphones and others. It aims to help curb transgressions and avoidance practices of excise duties and other related taxes in various industries."

SARS wants to encourage consumers to report retail outlets and vendors who sell illicit goods to the nearest SARS branch office or the SARS Anti-Corruption and Fraud Hotline on 0800 00 28 70.

As part of the campaign, Enforcement, Post Clearance Inspection and Anti Smuggling members raided 16 bottle stores and eight manufacturers in Gauteng during the last week in November, during which more than 100 cases of suspected illicit liquor were seized. The officials also confiscated cartons of suspected counterfeit cigarettes and sealed off a warehouse containing 84 ethanol and fermentation drums for further inspection.

A similar raid on 54 bottle stores in Durban last month led to seizure of 2193 cases of white spirits valued at about R450 000 in lost revenue.

Since April 2005, about 18 million cigarette sticks valued at more than R12 million have been confiscated by Customs anti-smuggling officials.

The most common examples of cigarette smuggling SARS has uncovered include the transportation in containers and trucks with false compartments.

Of particular concern are incidents of "round tripping" where locally manufactured cigarettes are exported and thus exempted from duties and taxes. These goods then find their way back into South Africa. "Ghost exports" were also uncovered by SARS where empty containers or containers with other goods are exported to neighbouring countries and re-enter the domestic market with tobacco products for which duties and taxes have not been paid.

The campaign is supported by the Consumer Goods Council of South Africa (CGCSA). Nick Tselentis, Legal and Regulatory Affairs Manager at the CGCSA explains: "Illegally manufactured or smuggled cigarettes constitute a threat to legitimate activity in the industry. Illegal imported or counterfeit tobacco products can normally be distinguished by the relative low selling price to consumers.

"In some instances a packet of 20 cigarettes is sold in the informal market for as little as R6. In most of these cases taxes and duties have been circumvented, the product was introduced into the market illegally or the traders were unable to provide proof of origin."

He adds that within the sugar confectionary industry, economic trends have shown that imports are increasing faster than industry turnaround, with the decrease in local production directly linked to this. This has a negative impact on the economy, leading to unnecessary job loss. In addition, undervalued imports, done by double invoicing and false declarations, are one of the major risk areas.

Carrim concludes: "SARS has a key role to play as protector of the compliant majority from those that do not comply. In order to protect local business interests, it is imperative that trade playing fields are levelled out. Most importantly, the public plays an integral role by not buying counterfeit goods and reporting suspicious activity."