New tax law to have serious consequences for taxpayers
The announcement of the of the Tax Administration Bill is set to have stern and significant consequences for taxpayers, by granting the South African Revenue Services (SARS) the power to search and have in possession relevant material without the use of a warrant, said tax executive Beric Croome from law firm Edward Nathan Sonnenbergs (ENS).
The Bill, said to be fully enforced in maximum two months from now, would most certainly introduce parts of the legislation on different dates. It would be extremely difficult to put all of it into effect immediately, said Croome, quoted in the local press.
One of the most important and debated elements of the new Bill was the provision of search and seizure powers that would be given to SARS, which will allow it to have the power to search and seize suspect materials without a warrant.
“SARS has a duty to uphold the tax laws of South Africa. Previously, if serious tax evasion was identified during a SARS audit, there was no power to seize documents which would have assisted SARS immediately, with the result that the evidence was likely to disappear by the time a warrant was eventually granted.”
Croome said that while the new Bill is expected to help SARS in implementingits duties, there was also a concern about the possibility of taking advantage of the power given to SARS.
“There was a proposal that any documents that are seized by SARS without a warrant should then be given to the court, which would then determine whether access to these documents should be granted; however, this was not accepted.”
Although there were concerns about the possibility of misusing the power, the establishment of a Tax Ombud in the bill is perceived as a positive move. The Ombud should have a good background in both customer service and law and will be accountable to the finance minister.
“We welcome the appointment of an ombud to deal with tax affairs; however, for this to be successful, the appointment will be critical. This is similar to the model that has been adopted in Canada and the United Kingdom and should help to create a level of independence.”
The value or success of the ombud would depend heavily on the character of the person appointed, added Edward Nathan Sonnenbergs’s director, Ernie Lai King.
“Hopefully, this appointment will assist in the process of dealing with disputes arising from tax issues and not prove to be yet another layer of administration”, he concluded.
The Bill is expected to come into effect in the next coming four to six weeks.