Cape Town - 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 (was) 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
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
"This is similar to the model that has been adopted in
Canada and the United Kingdom and should help to create a level of
The Tax Ombud would be paid out of Sars' 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.