The Durban Magistrates’ Court has sentenced Bongani Bheki Cosmos Magubane to an effective 10-year imprisonment after he pleaded guilty to five counts of Corporate Income Tax (CIT) fraud and one count of Pay As You Earn (PAYE) fraud. Mr Magubane represented his company, Imbhenge Trading Enterprise CC which is also an accused.

For the tax period of 2012 to 2016 (five tax seasons), Mr Magubane filed a nil return to the South African Revenue Service (SARS). Natasha Ramkisson-Kara, regional spokesperson for the National Prosecuting Authority, said he claimed that he had not received any income. However, he had received an income during this period, and he owed the SARS an amount of approximately R2.9 million (for the five tax returns).

“Further, PAYE tax credits of R10.2 million were claimed for the benefit of the company in 2019 causing the income tax debt of approximately R9.3 million (which was owed to SARS by Imbhenge Trading Enterprise CC) to be extinguished,” said Ms Ramkisson-Kara.

“This meant that the SARS had to issue a tax compliance certificate to the company. This raised a red flag on the SARS system, as Magubane had not filed an IRP5 to this effect. This prompted an investigation by the SARS and the offences came to light.”

In aggravation of the sentence, Advocate Richard Sbonelo Mkhize led the testimony of a SARS investigator who mentioned the importance of being tax compliant. The investigator said that these offences had a negative impact on society and the economy of the country.

Mr Magubane was sentenced to an effective 10-year imprisonment. The company was sentenced to a fine of R200 000, which was wholly suspended for a period of five years on condition that Mr Magubane is not convicted of fraud, theft, forgery or uttering during the period of suspension.

“This case is indicative of the effective working relationship between the NPA and the SARS. Both aim to ensure that all those who evade tax are identified and successfully prosecuted. The NPA, SARS and South African Police Service (SAPS) officials who worked on the matter are congratulated. Stakeholder engagement and collaboration are key to successfully prosecuting tax cases,” said Ms Ramkisson-Kara.

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