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Section 46: Request for relevant material - SARS' "long-reach" attempt

Tuesday, 11 August 2015   (0 Comments)
Posted by: Authors: Nina Keyser and Chetan Vanmali
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Authors: Nina Keyser and Chetan Vanmali (Webber Wentzel)

The TAA is not applicable outside the borders of South Africa. Consequently, SARS cannot force non-South African entities to provide relevant material in terms of the TAA. The non-South African entity would only be obliged to provide the relevant material in those instances where a treaty exists between South Africa and country of the non-South African entity.

The proposed amendment deals with SARS' audits of South African associates of a multi-national group, where relevant material may be held by other members of the group located outside of South Africa. The proposed amendment appears to seek to oblige the non-South African entity to provide the relevant material to SARS within 90 days from the date of the request for same from SARS. If this is what is intended, the amendment will not be effective as the TAA has no extra-territorial force. SARS would need to explore other avenues to try to obtain the relevant material held by the non-South African entity (eg, a treaty). 

If, on the other hand, the amendment refers to a request to a taxpayer for information which is held by a connected person offshore, the taxpayer must provide the requested information within 90 days. In addition, the further amendments to section 46 of the TAA aim to prohibit the taxpayer from relying on that relevant material if it was not produced when initially requested. The prohibition is subject to review by a competent court, but it is limited to exceptional circumstances. This purported limitation on the rights of taxpayers to present relevant information in court, which could be necessary to fairly resolve a dispute, if promulgated, may very well be subject to interrogation and challenge in the future as it potentially infringes on a series of touchstone constitutional rights.

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