South African Revenue Service (Sars) Commissioner Tom Moyane was suspended on Monday, with immediate effect, the Presidency said.
Mark Kingon has been appointed as acting commissioner. He is currently the acting chief officer: business and individual taxes within Sars.
"President Cyril Ramaphosa has today [Monday] informed... Moyane of his suspension with immediate effect pending the institution of disciplinary proceedings. President Ramaphosa said it was in the public interest to restore the credibility of Sars without delay," the Presidency said in a statement.
"In a letter to Mr Moyane, President Ramaphosa said: 'Developments at the Sars under your leadership have resulted in a deterioration in public confidence in the institution and in public finances being compromised. For the sake of the country and the economy, this situation cannot be allowed to continue, or to worsen'."
The Presidency said that concern had been raised in particular about the manner in which Moyane had handled the matter of former senior tax officer Jonas Makwakwa, referring to his treatment of the report given to him by the Financial Intelligence Centre, and his failure to immediately report this to the Minister of Finance.
"Another concern that was raised was the management of VAT refunds, which brought the Sars into serious disrepute and potentially jeopardised the integrity of the Sars as collector of revenue and adversely affected tax morality among tax payers," the statement read.
"The decision to suspend Mr Moyane follows a meeting in which President Ramaphosa informed Mr Moyane that he had lost confidence in his ability to lead Sars and offered him an opportunity to resign with immediate effect, which Mr Moyane declined.
"President Ramaphosa indicated that as Sars Commissioner, Mr Moyane holds a high position of trust in the management of the country’s public finances. It was therefore necessary to act urgently and immediately to protect the institution and place it on a path to stability and recovery."
On March 16, Moyane denied any involvement in approving a value-added tax (VAT) refund to Oakbay, a company linked to the controversial Gupta family, through a third party.
In a statement, the Sars lashes out at the Daily Maverick for a report stating Moyane aided money laundering when he allegedly pressured officials within the revenue service to make payments into the accounts of a third party last year after the four major banks in South Africa closed the bank accounts of Gupta-linked companies.
Emails reportedly obtained by the Daily Maverick's investigative team Scorpio show a complaint by Oakbay’s Ronica Ragavan to Moyane. Sars said this was forwarded on and any subsequent decisions were not Moyane's.
"The undeniable fact that must be stated unambiguously is that at no point did the Sars Commissioner instruct any Sars employee on how to deal with the Oakbay matter," Sars said.
"The referral of the complaint by the Commissioner to other units of Sars was forwarded by his office as received by Oakbay, with no irregular action on his part."
Sars said it had an obligation to refund money that is "properly payable to a taxpayer".
The decision to make a payment into the account of a third party had been approved by Sars' head of legal, the revenue service said, insisting all had been above board.
"...Sars had previously received a similar request that a VAT refund be paid into a third party account. In this case, too, the legal position adopted by Sars was that this could be done and was not illegal," the statement said.
"The conclusion that the Commissioner’s silence and his non-participation in the exchange of emails among legal experts amounts to agreement with one or other view is frankly absurd."
On March 15, Business Day reported that Moyane's days were numbered and that his removal was set to be put before Cabinet. However, Communications Minister Nomvula Mokonyane said Moyane's future had not been on the Cabinet agenda at the time.
On March 14, Moyane announced the resignation of Makwakwa after he was cleared of charges of misconduct. Makwakwa, who was the chief officer for business and individual tax, resigned with immediate effect after working at Sars for 22 years.
Moyane said he was doing so for personal reasons and would make all his personal tax statements available for scrutiny.
Makwakwa was suspended and investigated over suspicious payments into his bank account. The payments were red-flagged by the Financial Intelligence Centre in 2016, and Moyane was forced to suspend Makwakwa after this was reported in the media.
In November last year, he was cleared of all charges and given the go-ahead to return to work. Opposition parties objected strongly to his reinstatement.
Recently he faced fresh allegations of conflict of interest after NICS was appointed as debt collector for the revenue service, and Moyane said it was when he put these to Makwakwa, with the intention of suspending him, that he announced that he had already decided to resign.
