n Acta Criminologica : African Journal of Criminology & Victimology - The use of electronic-filing for the commission of income tax fraud in South Africa : an empirical study

Volume 32 Number 2
  • ISSN : 1012-8093


In South Africa income tax is unavoidable, since all are liable to pay taxes. Electronic-Filing (e-filing) was first instituted in 2001 and expanded in 2006. However, the institution of e-filing created opportunities for the commission of income tax fraud. Tax fraud is defined, among other criminal acts, as when a taxpayer misappropriates tax deducted from other payments made to a creditor, such as a non-resident withholding tax or Pay-As-You-Earn (PAYE), or where a person knowingly provides false or incomplete returns intending thereby to evade both the assessment and payment of tax. In other words, tax fraud occurs when taxpayers do not pay their taxes or find illegal ways to avoid paying outstanding taxes. Tax fraud, therefore, being one of the factors impeding tax revenue collection in South Africa. Accordingly, tax fraud is detrimental to the overall fiscus impeding the rendering of adequate services to the public and results in poor service delivery. Tax fraud often leads to the existence of a shadow economy in which people do not reveal the real and taxable income that they have earned through legal activities including barter and monetary activities, in order to avoid tax obligations, i.e. paying annual tax on any income earned. This article argues that tax is a vital ingredient in ensuring that South Africa remains economically healthy for generations to come. This article suggests that syndicates that defraud South African Revenue Services (SARS) use electronic-filing (e-filing) as a predominant method of tax avoidance which system seems to allow defrauders to falsify the information that is provided by the applicant, and it appears that such taxpayers collude with tax consultants, personnel attached to South African Revenue Services and other knowledgeable private individuals. Recommendations offered are that the South African Police Service’s (SAPS) Directorate of Priority Crimes Investigations (DPCI) should call for the improvement of SARS e-filing system in order to detect falsified information by tracing the history of applicants. Investigators should closely look at current trends to improve present investigation techniques. SARS should also implement internal investigations (of staff) to monitor the claims made before tax returns are paid out.

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