VAT corruption on the South African side
February 18th, 2008
I wrote recently about a conversation I had with a ‘runner’, where he told me about the scale of bribing that goes on in some of the journeys he and cross border traders make between Zimbabwe and South Africa. It was his description of corruption on the South African side that got my interest. I know corruption is rife in Zimbabwe, but hadn’t fully appreciated that Zimbabweans provided an income to South African officials as well. I’ve been asking a bit about this.
One guy I know well said that he himself had paid a R10 bribe to the person manning the gate on the South African side. Gate passes have to be stamped by both customs and immigration to show that the traveller has cleared both, and only then can they proceed on their journey. In his case, either one or the other had forgotten to stamp his pass and he hadn’t realised. When he got to the gate, the official wanted him to turn back and re-join the endless queue to get a stamp. But he already had other cars behind him and turning around proved to be a nightmare and angered the other drivers. The gatekeeper leant towards the car window and quickly whispered “Ten rands”.
“I gave him R10 so fast my hand was a blur”, the guy joked.
The gate boom lifted, and he continued onwards towards Zimbabwe, despite the fact that a major border transgression had effectively occurred. My friend believes that this wasn’t the first time the gatekeeper had turned a blind eye: “He was confident, knew exactly what he wanted and made it happen quickly and discretely”.
But the big potential scam on the South African side appears to involve Zimbabweans and the re-claiming of VAT.
Zimbabwean shoppers need not pay VAT to the South African government, and there’s a small hut at the border where Zimbabweans can queue, submit their invoices and have all the VAT they have paid totalled and then refunded. I’ve been told that if the invoices are less than R1000, a cheque is issued on the spot; more than R1000, a VAT certificate is issued and a cheque is posted to the recipient by the tax people at a later date.
I have never claimed VAT. The queues to the tiny little hut take place under a corrugated iron roof and extend outwards into the blazing sun. And every time I have been there there have been only two (slow) people manning the desk. Temperatures in the afternoons sore into the high 30s (Beitbridge can get as hot as 40′C), and it is hellish. My VAT refund would usually be as little as R30 because I never buy much, and frankly I would pay R100 to avoid a queue like that!
But the fact is that all those little till strips translate to hard cash – more importantly, foreign currency, highly valued in Zimbabwe and very hard to come by. Cross-border traders and runners usually do bulk buys so their invoices add up significantly. Reclaiming VAT is a perk that most of their customers don’t think about when they pay for the goods up front back in Zimbabwe. So the trader makes an additional bit of extra profit by claiming for himself the VAT on goods paid for by others.
So the scam opportunity presents itself. Every person standing in the queue, clutching a wad of till strips, is effectively holding cash in the open. One guy I spoke to told me he had his pockets picked in the queue and lost several till strips. Someone else no doubt nicked them and added them to their pile to claim his VAT.
Just as ‘touts’ work their way up and down the queues in the customs buildings in the Zimbabwean side, offering to help you to clear customs for a ‘fee’ (bribe), so touts have started to scan and work their way through the South African VAT queue. I was told to be very careful in the queues: “Staple all your invoices together so none of the officials can nick one or two, and make sure you have copies of everything because they will deny it ever existed if it does go missing”. Another person told me to, “Refuse all offers of help; you only need to do it once before you understand how it all works”, she said. “If you accept help, you will be robbed”.
Apparently the touts offer to assist, by ‘buying’ your invoices from you for a discount. They total up all the invoices (and this is the point where some tend to ‘go missing’) to work out how much they are worth, then they offer you half the value of the VAT left on the remaining invoices. I assume that the touts then re-claim the full VAT as their own. I find it hard to believe that the South African officials can’t see what is happening in the queue and there must be a few faces very familiar to them, especially if they make regular claims but never leave the border. Are the South Africans involved? Why are they refunding VAT on goods the claimant cannot produce as evidence that he or she has bought them?
The advantage to the ‘customer’ is that they receive a little money back, but don’t have to stand in the queue. For someone like me, with my R30 of refundable VAT, it might be worth handing the strip over to a happy queuer for R15 because I always leave with nothing. But I was strongly advised against even trying this.
“Think about it”, a friend said. “If you give them your till strip they know what you’ve bought and exactly how much and what you are carrying with you. All they have to do is phone their friend on the Zim side with the registration number of the car you are travelling in, and you are a sitting duck for theives”.
A good point. I think I’ll hang onto my till strips myself, or give them to someone I care about who needs a bit of extra cash.
