In terms of the 'pay now and argue later principle'
taxpayers are obliged to pay the South African Revenue Service any
taxes due; albeit any pending court decisions or objections against
This principle has been challenged on constitutional grounds but
the Constitutional Court in Metcash Trading Ltd v C: SARS
affirmed its validity. The Constitutional Court held that the pay
now and argue later rule is not unfair and its limitations are
justifiable in terms of section 36 of the Constitution. In other
words, not paying the full
Pursuant to the Metcash Trading judgement in the year 2000,
sections 13(1) and 38(1) of the Taxation Laws Second Amendment Act
of 2009 substituted section 88 of the Income Tax Act and section 36
of the Value Added Tax Act respectively. The Minister of Finance
announced that both sections would come into operation on
1 February 2011.
Both sections deal with the payment of tax pending objection or
appeal. Specifically that an obligation to pay tax is not suspended
as a result of an objection or appeal. Furthermore, a taxpayer may
request the Commissioner to suspend the taxpayer's obligation
to pay tax where the liability for tax is disputed; until the
matter has been resolved.
Also, the amendments provide the Commissioner with a guideline
for deciding on whether a taxpayer's application to suspend
their tax obligation should be approved.
The Commissioner is required to consider amongst other
the taxpayer's compliance history;
the amount of tax involved;
the taxpayer's ability to provide security; and
whether there is fraud involved.
The South African Revenue Service issued a media statement on 14
February 2011 indicating that the relevant amendments make it clear
that disputed tax debts will still be due and they provide guidance
on the factors that are considered by the Commissioner in deciding
on whether to suspend an obligation to pay tax on the part of the
The content of this article is intended to provide a general
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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