South Africa Putting In Place Advance Tax Ruling System

by Robert Lee, Tax-News.com, London

06 October 2006

Enabling legislation for South Africa's new Advance Tax Ruling System came into effect on Monday.

The System represents a major new service for taxpayers and is intended to promote clarity, consistency and certainty in the interpretation and application of the tax laws and, by doing so, help taxpayers to comply with the tax laws.

The System authorises the Commissioner to issue two new types of rulings: binding private rulings and binding general rulings.

According to the South African Revenue Service:

"Under this system, taxpayers may formally request a ruling from the Commissioner in connection with the interpretation and application of the tax laws to a specific proposed transaction, subject to certain limitations."

"Provided that there is full disclosure of all material facts, the ruling will generally be binding on the Commissioner when an assessment is made in connection with that transaction."

"The Commissioner will also publish all binding private rulings in an edited form to protect confidentiality. This is being done to provide information and guidance to taxpayers generally and to ensure that all taxpayers operate on a level playing field. The binding effect only applies, however, to the applicant who requested the ruling. The binding private rulings may not be cited as precedent by any other taxpayer."

The Commissioner will begin to accept applications for binding private rulings on October 16.

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