The Tax Administration Bill is an incorporation of generic
administrative provisions contained in various pieces of tax
legislation; and has been branded as a step towards the re-drafting
of the Income Tax Act.
It is an effort by the National Treasury to provide a foundation
for the updating and modernisation of tax collection and
administration in the South African tax system.
The second draft of the controversial Tax Administration Bill
was released for public comment in October 2010 for a second round
of comments after having been approved for submission to Parliament
at a cabinet meeting of 1 September 2010.
According to the Commissioner, Mr Oupa Magashula, SARS (South
African Revenue Service) generally faces two types of disputes. The
first relates to problems in the interpretation of the law, in
terms of which the normal dispute resolution processes in the form
of alternative dispute resolution and appeals to the Tax Board as
well as the Tax Court are available. The second type of dispute
relates to failures in the administration of tax legislation where
the administrative resolution channels that a taxpayer can make use
of are the internal service issue resolution, the SARS Service
Monitoring Office and the Public Protector before the normal court
system is used.
Section 14 of the current Tax Administration Bill gives the
Minister of Finance the power to appoint a Tax Ombud as recommended
by the Katz Commission. This has been noted by the Commissioner as
a bid to create an independent and effective recourse for tax
payers. It is seen as a mechanism to address failures in the
service delivery system, as the Tax Ombud's main mandate is to
review complaints on service, procedural and administrative
However the taxpayer seems to be in for an administrative hurdle
as the Tax Ombud is an intermediate step between SARS, the Public
Protector and the courts. Before one can consult or seek recourse
with the Tax Ombud, the SARS call centre and the SSMO will have to
be consulted first. There are preliminary channels that need to be
exhausted first before the Tax Ombud can be made use of.
The entire operation is to be funded by SARS whose officials are
to make up the staff of the Tax Ombud's office. One only hopes
that the Ombudsman will be successful in ensuring that SARS is
accountable in its service and treatment of tax payers.
The framework of establishing or creating a South African Tax
Ombud is based mainly on the Canadian Taxpayer Ombudsman as well as
the UK Revenue Adjudicator.
The first Canadian Ombudsman began serving his three year term
in February 2008, as mandated by the Canadian Taxpayer Bill of
Rights which is similar to the Taxpayer's Charter that was
published by SARS in 1997. One is somewhat forced to wonder if it
is not a bit too premature to be mimicking a structure that is
still in its infancy stages.
The introduction of a Tax Ombud is a welcome development in the
South African Tax system considering that the Tax Administration
Bill equips SARS with far reaching powers that could erode the
rights of the South African taxpayer. An example is that of
SARS' right to carry out search and seizure operations without
a search warrant.
It is however questionable how effective and unbiased the Tax
Ombud will be considering that the staff of the Tax Ombud is to be
seconded from the SARS workforce that arguably would have adopted
the approach to the taxpayer as influenced by SARS.
It seems more practical for the Minister to mandate a fresh work
force from various other sectors with just as much skills and
abilities or even better than the current staff at SARS to run the
Tax Ombud division.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Effective collaboration amongst government agencies, automation of processes and capacity building by tax authorities have always been identified by stakeholders as strategies for achieving an efficient tax system.
In response to information provided by FIRS, NSE has sent letters to publicly listed companies, who were purportedly identified by FIRS as non-compliant.
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