SAICA Warns Against Over-Regulation Of South African Tax Advice Industry

by Robert Lee, Tax-News.com, London

17 August 2005

Whilst the South African tax industry will benefit from a national framework of regulation, new legislation should be careful to avoid a situation whereby tax consultancy is an over-regulated industry, the South African Institute of Chartered Accountants (SAICA) has warned.

Proposals presented by the government seek to regulate the provision of tax services by laying down rules about how such consultants function and how consumers can seek redress in cases of wrongdoing by tax advisors. However, SAICA has urged policy makers to take into account existing voluntary codes of conduct which exist in the industry.

"If overregulation is to be avoided, it is important that some recognition be given to those codes of conduct which already exist,” noted Jackie Arendse, project director of tax at the institute, according to Business Day.

SAICA has sent SARS a memorandum containing recommendations on how tax practitioners should be regulated in the public interest. The recommendations emanate from the 2002 national Budget, in which the Finance Minister proposed regulation “to promote better compliance and ensure that taxpayers receive advice consistent with the tax legislation”.

SAICA's memorandum urges that regulation be applied to all tax practitioners and not to a certain group only.

“If the public interest is to be protected, any person completing a tax return on behalf of another should be regulated," the Institute said.

However, SAICA maintains that within the regulatory framework recognition should be given to professional associations with well-established codes of conduct and properly functioning disciplinary procedures.

“SAICA members, for example, are already regulated and, in some cases, may be regulated twice, as those in public practice are regulated by both SAICA and the Public Accountants' and Auditors' Board (PAAB)," SAICA stated.

Around 15,000 out of a total of 70,000 practitioners offering tax advice and services had registered with the South African Revenue Service (SARS) by the June 30 deadline to do so.

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