SARS unravels SA clothing industry: Tax leakages, job losses blamed on illegal imports

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As the local sector bleeds jobs because of cheap and illegal imports, the apparent disarray at SARS also cost the fiscus at least R3-billion in unpaid import taxes on Chinese imports in 2014 alone. This, say union researchers, could have funded 9-million monthly child support and 2.1-million monthly old age grants in 2015 and could be regarded as a form of economic sabotage.

It’s the figures in SARS’ annual reports that paint the disturbing picture. In 2009 SARS kicked off a campaign to stem illegal, cheap imports into South Africa that had, at the time, resulted in massive job losses in the sector.

That year, a new price-reference system, negotiated by representatives of government, labour and business and which made it easier for customs officials to identify false amounts on invoices for clothing imports, began to be applied. The system was also employed to identify suspicious transactions through the use of historical transaction prices. According to a Nedlac report at the time, importers commonly used fraudulent amounts on import documents to avoid the 40% import duty on clothing products. This was also a programme outlined in government’s Industrial Policy Action Plan (IPAP). At first things went well.

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