BL Premium reports that Denel is operating without a tax clearance certificate and can be held criminally liable for breaking tax law.

On Monday, the state-owned defence company and arms manufacturer received a letter from the SA Revenue Service (Sars) giving it had a week to pay its PAYE and VAT obligations to the taxman. Sars said it would issue Denel with the critical tax clearance certificate only on payment of the obligations. The company did not disclose how much it owed the revenue service. Section 234 of the Tax Administration Act lists failing or neglecting to withhold and pay Sars tax when required to do so among prosecutable offences. On Tuesday, Denel’s acting CEO William Hlakoane and board chair Monhla Hlahla briefed parliament’s standing committee on public accounts (Scopa) on its debt and other issues. “It is almost resolved ... we have received the letter yesterday [Monday] saying they [Sars] are willing to accede to us ... as we speak we have a team that is working with Sars to see how much can be paid at the end of the month,” Hlakoane claimed. According to Hlakoane, suppliers have grown so mistrustful that many were demanding payment in advance. The state-owned enterprise is drowning in debt, including R636m owed to staff and R900m to suppliers.

• Read the full original of the report in the above regard by Erin Bates at BusinessLive (paywall access only)

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