Revenue Service on arrest of suspected illicit gold industry syndicate members

Further arrests of suspected illicit gold industry syndicate members

Following the arrests of three suspects linked to an illicit gold industry syndicate in May 2015, an additional two suspects were apprehended and arrested in a late night operation by the Directorate for Priority Crime Investigation (Hawks) and the South African Revenue Service (SARS) in Johannesburg last night. This follows further intense investigations into the operations of the syndicate by SARS.

The syndicate in question is alleged to have fabricated over 16 000 fraudulent invoices (worth about R437 million) to reflect purchases of second-hand gold jewellery. These fictitious purchases were used in claiming a fraudulent 14% notional VAT input over the period of 2010 to 2012, as well as understating their sales during the same period. 

Subsequent to the initial arrests in May 2015, additional members who also participated in the illegal activities of the syndicate were uncovered, which included the fabricating of invoices and the defrauding of the tax system through the use of second-hand goods registers and SARS VAT264 forms used to misrepresent second-hand jewellery purchases. 

It is important to note that, since August 2013, SARS has been investigating approximately 26 companies and individuals that were suspected of using fraudulent tax schemes to legitimise illegally mined or smuggled gold. In February 2015 a case was registered with the South African Police Service.

Since the investigations began, SARS has been able to successfully prosecute eight individuals and companies relating to tax compliance. The investigations have also led to approximately R65 million in outstanding payments due.