Foreign diplomats in South Africa have been running profitable liquor- and cigarette-dealing sidelines, avoiding taxes in the process.
Investigations by the South African Revenue Service (SARS) in 2019 and 2020 have found that diplomats are using their credentials to shop at duty-free outlets, and then sell the goods locally. This is costing the fiscus a staggering R100 million every month.
Duty-free retailers are not able to sell to most South Africans. They sell goods to travellers on the understanding that they will take them out of the country – and to diplomats, on the understanding that they will consume them on their embassy premises.
Those most seriously involved are said to be from Burundi, Lesotho, Ghana, Guinea, Malawi, and Rwanda, although there have been instances of diplomats from elsewhere abusing their status to purchase goods for acquaintances.
SARS and the Department of International Relations and Cooperation (DIRCO) were ‘extremely concerned’ about this. Investigators established that some diplomats were spending as much as R5 million on liquor, which would then be sold to local customers. The latter included liquor traders.
A SARS official quoted by News24 said that since their investigation focuses on a few diplomats, the problem may be more extensive than the investigation had revealed.
The problem was apparently first identified in 2014, but the investigation launched at this time failed to make progress owning to the turmoil within SARS.