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Tax probe will go long way towards redeeming SARS - legal expert

May 23 2018 18:17
Khulekani Magubane

Cape Town – President Cyril Ramaphosa’s proclamation of an inquiry into the South African Revenue Service will empower such a probe to establish the impact of Commissioner Tom Moyane's decisions on the tax agency’s operational quagmire.

Ramaphosa announced the proclamation during his budget vote of the Office of the Presidency in Parliament on Wednesday afternoon. He first made mention of the inquiry into SARS during his maiden State of the Nation Address in February.

Ramaphosa has moved to stabilise the state of affairs at SARS, placing commissioner Tom Moyane on suspension and appointing Mark Kingon to replace him in an acting capacity. SARS has been dogged with scandals implicating Moyane and “low tax morality”.

Ramaphosa said: "I have today signed a proclamation establishing a commission of inquiry into tax administration and governance charged by former Judge Robert Nugent, and assisted by Michael Katz, Advocate Mabongi Masilo and Vuyo Kahla."

A statement from the Presidency said the inquiry’s terms of reference would include adherence to tax administrative processes, and whether deviations from the established processes unfairly benefited politically-connected people and people connected to top managers of SARS.

It also mentioned "adherence to customs and excise provisions, with particular reference to tobacco products" as well as "adherence to internal personnel policies and HR practice, in light of the exit of senior personnel and alleged coercion of SARS officials to resign.” 

Legal expert Lawson Naidoo said Ramaphosa’s proclamation of the inquiry into SARS is a positive development and would go a long way to redeem the revenue service’s reputation.

“One has to welcome the institution of the inquiry and it is an important initiative to restore the integrity of the revenue serve. It will go a long way in supporting it to meet its responsibilities. To get a clearer sense of what happens next it would be important to look to the gazetting,” said Naidoo.

Naidoo said South Africa needs to look at the fact that Ramaphosa announced a commission with a team of four people who will be led by Judge Nugent.

“Not much is known about all of this, but it must be assumed that the president has applied his mind to this and has picked the people who would be best placed to bring about the outcomes he hopes for,” Naidoo said.

“The adequacy and legality of steps that SARS took to address revenue shortfalls in the last two years, including allegations of unauthorised payment of bonuses to top executives and withholding of refunds owed to ordinary tax payers,” the statement added.

The inquiry will also look into the performance of tax administrative duties and application of discretionary powers required or enabled by existing tax legislation.

"This inquiry is separate from the disciplinary process instituted against SARS Commissioner Tom Moyane. The inquiry is also separate from the Davis Tax Committee appointed by the Minister of Finance, which focuses on assessing or recommending specific tax policy issues," the statement said.

Ramaphosa said the official terms of reference will be gazetted in the next few days.

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