A tax practitioner in the Eastern Cape is accused of filing zero returns while allegedly hiding millions in business income for several years.
The 45-year-old tax practitioner is currently out on R50 000 bail after the Hawks accused him of being at the centre of an alleged R9.6-million tax fraud scheme involving fraudulent tax returns and manipulated VAT declarations.
Francis Muleso was arrested on Monday after Hawks investigators obtained a warrant for his arrest in connection with alleged tax fraud dating back to March 2016.
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The Hawks allege that Muleso abused his position as a tax return practitioner to misrepresent the financial position and tax liabilities of a close corporation for nearly four years.
According to Hawks spokesperson Warrant Officer Ndiphiwe Mhlakuvana, Muleso allegedly submitted zero income tax returns to the South African Revenue Service (SARS) despite the business allegedly generating taxable income.
The alleged fraud came to light after SARS detected irregularities and referred the matter to the Hawks’ Serious Commercial Crime Investigation team in Mthatha to probe.
VAT figures raise red flags
Mhlakuvana said that the Investigators subsequently examined the close corporation’s banking records and tax declarations and allegedly uncovered major discrepancies in its VAT returns.
“The arrest was carried out by the Mthatha Hawks’ Serious Commercial Crime Investigation (SCCI) team. The case relates to the alleged submission of fraudulent tax returns, the misrepresentation of the close corporation’s financial position and tax liabilities between March 2016 and March 2020.
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“It is alleged that Muleso, in his capacity as a tax return practitioner, misrepresented the entity’s taxable position to SARS, including by submitting nil income tax returns despite the alleged existence of taxable business income. SARS reportedly detected irregularities that prompted a referral to the Hawks for further investigation,” said Mhlakuvana.
He added that a subsequent examination of the close corporation’s banking records and tax declarations allegedly revealed significant discrepancies in its value-added tax (VAT) submissions.
According to the investigation, output tax had been understated by more than R2.7 million, while input tax claims had been overstated by more than R6.1 million.
“The alleged VAT irregularities resulted in reported financial prejudice of R8,854,305.86. When the alleged VAT and income tax liabilities are combined, the total reported financial prejudice to SARS exceeds R9.6 million,” said Mhlakuvana.
Arrested at court
Muleso’s arrest unfolded at the KuGompo City Magistrates’ Court, where he had appeared in an unrelated matter involving similar charges.
Mhlakuvana said investigators apprehended him after an arrest warrant had been issued and Muleso was subsequently taken before the Mthatha Specialised Commercial Crimes Court, where he was granted bail of R50,000.
The court postponed the matter to January 18 2027 for the contents of the docket.
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The Hawks have warned that the investigation is far from over, with further arrests expected.
Mhlakuvana said the investigation followed discrepancies uncovered between the company’s banking records and the tax information submitted to SARS.
The Hawks have not indicated whether Muleso acted alone or whether other people were involved in the alleged scheme.
More arrest loom
Mhlakuvana stated that the investigation remains ongoing as he indicated that more suspects could be arrested as they work to establish the full extent of the alleged fraud.
The Hawks urged anyone with information that could assist the investigation to come forward.
- Francis Muleso, a 45-year-old Eastern Cape tax practitioner, was arrested for allegedly filing zero income tax returns while hiding millions in business income from March 2016 to March 2020.
- Hawks investigators claim Muleso submitted fraudulent tax returns and manipulated VAT declarations, resulting in a reported financial prejudice to SARS exceeding R9.6 million.
- Investigations revealed VAT irregularities including understated output tax by over R2.7 million and overstated input tax claims by more than R6.1 million.
- Muleso was arrested at KuGompo City Magistrates’ Court on an existing warrant and released on R50,000 bail, with his case postponed to January 18, 2027.
- The Hawks' investigation is ongoing, with more arrests expected, and they have urged the public to provide any information that could assist in the case.
