Most Read Contributor in South Africa, September 2016
The promulgation of the Tax Administration Bill is set to have
serious and significant ramifications for taxpayers in South Africa
with the South African Revenue Service (SARS) soon to be granted
the power to search and seize relevant material without the need
for a warrant.
According to Dr Beric Croome, Tax Executive at ENS, the Bill is
expected to come into effect within the next 4 to 6 weeks.
"While we do expect the Bill to be promulgated soon, the
question remains as to whether SARS is ready from an operational
perspective to implement all of these changes. As a result, it is
likely that certain parts of the legislation will take effect on
different dates as it will be extremely difficult to implement all
of it immediately."
He says that one of the most significant and controversial
elements of the new Bill is the provision of Search and Seize
powers that will be granted to SARS, enabling the 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 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 says that while the new powers are expected to assist
SARS in carrying out its duties, there is also a concern about the
possibility of abuse of this power. "There was a proposal that
any documents that are seized by SARS without a warrant should then
be given to the Court, which would thendetermine whether access to
these documents should be granted; however, this was not
He notes that while these new powers are controversial, the
establishment of a Tax Ombud in the new Bill is a positive move.
"We welcome the appointment of an Ombud to deal with tax
affairs; however for this to be successful the appointment will be
critical. The Tax Ombud must have a good background in both
customer service and law."
He says the fact that the Tax Ombud will also be accountable to
the Minister of Finance, not the Commissioner, should also help to
alleviate concerns. "This is similar to the model that has
been adopted in Canada and the UK and should help to create a level
of independence. The Tax Ombud will be paid out of SARS'
budget, which has been criticized, but it is a step in the right
Ernie Lai King, Director at ENS, also said that the value or
success of the Ombudswill depend heavily on the character of the
appointment "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."
Originally published in MoneyMarketing, JUNE 22,
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