The promulgation of the Tax Administration Bill is set to have serious and significant ramifications for taxpayers, an expert said on Wednesday.
It would grant the SA Revenue Service (Sars) the power to search and seize relevant material without the need for a warrant, said Edward Nathan Sonnenbergs (ENS) tax executive Beric Croome.
He said the bill was expected to come into effect within the next four to six weeks.
It was likely that certain parts of the legislation would take effect on different dates, as it would be extremely difficult to put all of it into effect immediately, he said.
One of the most significant and controversial elements of the new bill was the provision of search and seizure powers that would be granted to SARS, enabling 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 1/8was 3/8 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 while the new powers were expected to assist SARS in carrying out its duties, there was 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 then determine whether access to these documents should be granted; however, this was not accepted.”
While these new powers were controversial, the establishment of a Tax Ombud in the new bill was 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 should have a good background in both customer service and law.
The fact that the Tax Ombud would also be accountable to the minister of finance, and not to the commissioner, should help to alleviate concerns.
“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 Tax Ombud would be paid out of SARS's budget, which had been criticised, but it was a step in the right direction, Croome said.
ENS director Ernie Lai King said the value or success of the ombud would depend heavily on the character of the person appointed.
“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 said. - Sapa