SARS seizes 26,000 litres of high-proof ethanol in Kempton Park

• SARS and SAPS seized 26,000 litres of high-proof ethanol at an unregistered warehouse in Kempton Park.
• The consignment was declared to be destined for a country further north into Africa but was instead offloaded at an unlicensed facility.
• One consignment would have meant dues and taxes due to SARS of around R9.1 million.
• SARS is committed to cracking down on non-compliance through intelligence-led interventions aimed at customs fraud, excise-duty evasion, smuggling, and illegal trade.

Those involved in customs fraud, excise-duty evasion, and other forms of illicit economic activity are put on notice. We will not surrender the destiny of this country to criminals or tolerate brazen alcohol smuggling and tax evasion.

A multi-million-rand crackdown on the illicit alcohol trade has resulted in the seizure of 26,000 litres of high-proof ethanol at an unregistered warehouse in Kempton Park. The operation was carried out by the South African Revenue Service (SARS) and the South African Police Service (SAPS), who worked together to identify and raid a storage facility for imported ethanol. According to SARS, the consignment was declared to be destined for a country further north into Africa, but instead of being removed through one of the ports of exit, it was offloaded at an unlicensed facility. The joint team discovered 1,000-litre flow-bins on site, which are suspected to contain a further 28,000 litres of ethanol.

SARS has long been aware of the role that tax differentials play in fueling the illicit alcohol trade. By exploiting these differences, criminal syndicates are able to illegally divert products and manufacture illicit liquor. The revenue service estimates that one consignment would have meant dues and taxes due to SARS of around R9.1 million. This successful enforcement action is part of a broader strategy to deal with the illicit economy and make non-compliance hard and costly.

The seizure of 26,000 litres of high-proof ethanol highlights the importance of compliance in the liquor industry. As SARS Commissioner Dr Johnstone Makhubu noted, the revenue service is committed to cracking down on non-compliance through intelligence-led interventions aimed at customs fraud, excise-duty evasion, smuggling, and illegal trade. This includes strengthening its capabilities to detect diversion schemes and ensure that those who seek to evade their tax and customs obligations are held accountable.

Lawyers should watch for potential compliance exposures and tax implications for clients involved in the importation or production of liquor products, particularly those exploiting tax differentials to divert products illegally.

Source: Original reporting via SAnews.gov.za