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Proposed Tax Practitioners Bill: An Enhanced Relationship With SARS or a Pressure to Spy?

Wednesday, 01 October 2008   (0 Comments)
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Proposed Tax Practitioners Bill: An Enhanced Relationship With SARS or a Pressure to Spy?

A report in Business Report published just before Minister of Finance Trevor Manuel’s Budget speech in February again raised the issue of the draft Tax Practitioners’ Bill being a veiled at tempt by SARS to get tax practitioners to spy on their clients.The draft bill has been described as "contentious” and the tax community fears that it will increase the pressure on taxpayers to stop "legitimate ta x planning”.That specifically relates to an attempt on the side of SARS to get ta x advisers to report "irregularities” in their clients’ tax planning.

The issue - dubbed a fishing expedition for SARS - has been in the spotlight since the regulation of the tax practitioners profession was raised in the 2002 Budget speech.It also received an international airing at the meeting of the Organisation for Economic Co-operation and Development (OECD)’s Forum on Tax Administration held in Cape Town in January. 

One of the matters discussed at that forum was enhanced co-operation of tax practitioners. Daniel Erasmus, tax attorney, discussed this issue with Johan Troskie, director at Deneys Reitz Attorneys: 

What were the key takeaways from the OECD conference in Cape Town?

South Africa is not a signatory to the OECD, but it has observer status and this country tends to play a significant role in OECD matters - hence the meeting being held in Cape Town this year.Corporate and social responsibility was high on the agenda of the meeting.The overriding theme was tax compliance, tax evasion and tax avoidance and the role tax practitioners could play in assisting governments to uphold their social responsibility – that of collecting tax and applying it appropriately.

To what extent was the Tax Practitioners’ Bill indirectly placed on the OECD agenda?

One of the key points of discussion was that revenue authorities were looking at ways of creating an enhanced relationship with tax practitioners so that they could help revenue authorities to fulfil their moral obligation of collecting tax. There were, however, inherent problems with such a relationship.

What co-operation were tax authorities seeking from corporates in contentious tax planning areas?

Some of the concepts that were bandied about at the OECD meeting were not clear. The concepts of tax avoidance and tax evasion were used interchangeably, for example. There should, however, have been a clear distinction between the two. There would always be a situation where corporate tax-paying South Africa and SARS would be on two opposing sides.

The good thing about better co-operation with SARS was that this would lead to easier access, improved administration and would make it easier for taxpayers to approach SARS.There have been several comments by tax advisers in the media on the Tax Practitioners’ Bill issue. Some supported the contentious bill, whereas others vehemently opposed it. 

Why was that?

Better co-operation would ease dealings with SARS, whereas others saw the Tax Practitioners’ Bill as a spy satellite launched by SARS upon industry. The concern was that SARS would be co-opting tax practitioners as spies through the hugely onerous process of tax reporting.

What were the implications of the bill for attorney-client privilege?

It seemed unfair that a tax practitioner should report a taxpayer who wished to sort out transgressions with SARS because the tax practitioner was compelled to do so by law. Attorney-client privilege should create a vacuum period in which the tax adviser could help the taxpayer not to transgress any further and sort out the problem.SARS had enormous powers through existing legislation to bring perpetrators to book and it seemed excessive to enhance its powers through the Tax Practitioners’ Bill.

Source: By TaxTALK 



Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.

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