Most PPE suppliers ‘not tax compliant’

Most companies awarded personal protective equipment (PPE) tenders by government departments were not tax compliant, SA Revenue Service (Sars commissioner Edward Kieswetter said on Monday.

Tax compliance is one of the basic requirements of the normal government tender system, which was set aside to allow emergency procurement of PPE and other equipment to address the urgent needs generated by Covid-19.

A total of 63% of all the companies awarded PPE tenders were not tax compliant.

Kieswetter also said in his keynote speech at the SA Institute

of Tax Professionals’ annual tax indaba that 22 of the companies that won R1.3bn of the R2bn of tenders awarded were linked to politically exposed people.

Most of those who were successful in winning tenders had no previous experience in the PPE business.

“Many of them received funds and transferred those funds into third-party accounts. So it just smells of impropriety and we will not rest to ... ensure that those companies honour the system by paying taxes.”

Sars would also work with law enforcement agencies to ensure that taxpayers engaged in criminal activity were brought to book.

President Cyril Ramaphosa has instituted a system whereby all PPE contracts are submitted to an interministerial committee for investigation. This followed a public outcry over the rampant corruption associated with the tenders.

Addressing revenue collection, Kieswetter noted that the tax collection to end-August amounted to R416bn, 20% lower than the R519bn for the same period in 2019.

This was the result of the lockdown, during which many businesses ceased operations and consumption declined. The Treasury has projected a 7.2% contraction in the economy this year. Stats SA will release the data on Tuesday. —