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Tax experts worried that big business will lose easy access to SARS

Thursday, 21 January 2016   (0 Comments)
Posted by: Author: Amanda Visser
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Author: Amanda Visser (BDlive)

Tax experts have expressed concern about large companies’ access to the South African Revenue Service (SARS), should rumours about the closure of SARS’s large business centre prove to be true.

PwC tax partner Kyle Mandy says any decision to do away with the centre would be surprising, given the global trend towards the introduction of large taxpayer offices in tax authorities.

Keith Engel, newly appointed CEO of the South African Institute of Tax Professionals (SAIT), says the rumoured removal of the centre would be "wholly outside of best international tax administrative practice".

"The purpose of a large business centre is to properly focus resources on 80% of the corporate tax base, to the advantage of both the revenue authorities and the taxpaying public," Mr Engel says. "Many African countries have similarly adopted this path in the past 15 years."

Almost a year ago, SARS Commissioner Tom Moyane ordered a comprehensive review of all of SARS’s work processes, IT systems and personnel requirements.

Although Finance Minister Pravin Gordhan said in December that the review and implementation of the recommendations had been put on hold, it is unclear whether or not the large business centre — which was established in 2004 — had already been dismantled before that.

Tax practitioners say the people they dealt with at the centre have been moved to other parts of SARS.

SARS has not confirmed the speculation about the centre’s closure and did not respond to questions.

Deloitte managing partner Nazrien Kader said the current status of the centre and its members was unclear, since there had been no formal announcement by SARS.

Mr Mandy said without more detail about what a new operating structure might entail, it was difficult to estimate the effect on large business.

"The primary concern is that the level of access to SARS will be negatively (affected), and large businesses may find it more difficult to resolve issues in an efficient manner," he said.

Ms Kader said the centre was set up with a specific purpose. In the past the complexity of transactions was not always understood, and the experience of the people dealing with the matters was not sufficient.

"SARS, the government and taxpayers have invested a significant amount in setting up the large business centre, finding the right people and ensuring that it worked the way it did. It will be a shame if it is actually dismantled," she said.

The Organisation for Economic Development and Co-operation (OECD) referred to the South African model in a 2007 report, in which it said that many countries had established special "organisational arrangements" to enhance the co-ordination and monitoring of the taxpayers responsible for the bulk of tax payments.

Mr Mandy said large companies were responsible for either bearing or collecting the bulk of tax revenues and their relationship with the revenue service was "paramount".

"Ideally, we would like to see SARS move towards a co-operative compliance model for large business, which entails a fundamental change in the way in which both SARS and large taxpayers interact with each other."

However, the most important issue is that SARS must be accessible to large taxpayers, to resolve issues in an efficient manner, he says.

Ms Kader said SA followed an international trend by setting up the large business centre. "We did not simply come up with this idea. It is a tried and tested formula that has worked in other economies."

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