President Zuma could owe around R16, 8 million in tax for Nkandla

Note to editors: This is the press statement that was distributed at a press conference hosted by DA Parliamentary Caucus Chairperson, Dr Wilmot James MP and DA Shadow Minister of Finance, Tim Harris MP today at Parliament. The 'Zuma's Debt to the State: Tax Implications Of Nkandla' document can be accessed here. 

The DA believes that President Zuma could have a tax liability of around R16, 8 million for the fringe benefits we calculate he received from the R246 million of public money spent on his private home in Nkandla.

The Public Protector, Adv. Thuli Madonsela, has this past week released the Nkandla report emanating from a DA-requested investigation her office conducted. This damning report highlights in great detail how President Zuma materially and improperly benefited from the upgrades, and in doing so, violated the Executives Ethics Code. 

The Public Protector has also made it clear that items such as the cattle kraal, the chicken run, the "fire pool" (swimming pool), the visitors' centre and the amphitheatre had nothing to do with security considerations for the President but only served to benefit his personal property. She duly recommended in her final report that President Zuma pay back part of the public money spent on these non-security line items. 

While the Public Protector does not explicitly state how much President Zuma owes for all the non-security items, the DA has studied her report, as well as other documents released by the media, and calculated - on a conservative estimate - that non-security upgrades to his private property could have been worth around R52, 8 million. 

The DA has accordingly written to President Zuma requesting him to table his re-payment plan for the amount he owes with Parliament, so that it can be subjected to public scrutiny.

If these amounts are not repaid, then they would be regarded as fringe benefits that the Minister of Finance has recently confirmed the President is liable to pay tax on. 

In a reply to an oral question in February Minister Pravin Gordhan stated: 

"All South Africans pay tax on their income and fringe benefits, be (sic) the person the President or an ordinary worker. South Africa is one of the few democracies where we are all equal when it comes to taxation, in that we are all taxed, with the exact amount determined by our income and fringe benefits, minus any allowed exemptions and deductions."

According to sections 2(a) read with 5(1) of the Seventh Schedule of the Income Tax Act, 58 of 1962, which sets out the benefits or advantages derived by reason of employment or the holding of any office, President Zuma would owe tax on the fringe benefits of the upgrades to his private residence in Nkandla. 

In determining Zuma's tax liability the value of the benefit would be added to his annual salary of R2, 6 million. According to the DA's conservative estimates, a total private benefit of R52, 8 million has accrued from the project - way beyond the R10, 6 million the Department of Public Works appears to have allocated to the President's "private account".

We believe the President should repay the full amount spent for his private benefit, but even if he only pays the R10, 6 million specified by Public Works, the excess - as a fringe benefit - would trigger a liability of R16, 8 million in tax payable. 

R16, 8 million could build:

140 RDP houses; 

Funding for 70 students for a 3-year degree;

93 police officers for a year;

86 nurses for a year; and 

More than a year and a half's worth of legal fees for the families of Marikana victims. 

The DA will be writing to the Acting Commissioner of SARS, Ivan Pillay, to request that a full investigation be launched to determine the exact amount that President Zuma owes in taxes arising from the upgrade at Nkandla. There cannot be some rules for members of the public and a different set of rules for those in power.

The DA will continue to do everything possible to ensure that every person - no matter how powerful - is treated equally before the law in South Africa. 

Statement issued by Tim Harris, DA Shadow Minister of Finance, March 26 2014

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