Regional Councils May Not Inspect Books, Says South African Tax Expert

Tax-News.com, London

26 September 2002

In South Africa, only the Revenue Service SARS has authority to inspect companies' records and books of accounts to substantiate tax and regional levy payments, but according to the Business Day newspaper Regional Services Councils are appointing agents to visit businesses in the belief that they are empowered to have access to company records.

Neither the Councils nor their agents have any such authority, says Beric Croome, director of leading corporate law adviser Edward Nathan & Friedland. Legislation gives only the SA Revenue Service (SARS) the power to inspect the records and books of levypayers. "Persons purporting to represent a council should not be admitted access to business premises," he told the newspaper.

Croome said taxpayers had a right to privacy under the constitution. Under tax laws, the SARS was required to give taxpayers notice prior to inspecting their books of accounts and related records. "The SARS is unable to arrive at a taxpayer's premises unannounced in order to conduct an inspection or audit of the taxpayer's affairs."

Croome also said it would be unlawful for the SARS to conduct an audit together with the officers of the council. The council did not have the power to conduct an audit on any levypayer's affairs.

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