South Africa's Businesses Groups Against New Tax Laws

by Amanda Banks, Tax-News.com, London

25 October 2001

Two of South Africa's leading business associations have given evidence at a joint meeting of Parliament's finance committees on the the Revenue Laws Second Amendment Bill to condemn a provision in the draft law that gives authorities other than the courts (such as retired judges, advocates, attorneys or the SARS Commissioner) the power to force disclosure of the private affairs of taxpayers.

Ernie Lai King of the South African Chamber of Business (Sacob) taxation committee said to the Parliamentary committees: 'It has always been of great benefit to the fiscus that taxpayers were able to rely on the secrecy provisions of the Income Tax Act when disclosing their affairs in their annual returns.'

Although Sacob recognised that finance-related crimes must be tackled, it argued that the Income Tax Act was 'not the correct code to pro-actively achieve that objective as it was the responsibility of the ministry of safety and security.' Currently, SARS can only divulge information at the courts' request. Sacob then called for applications for information on taxpayers be submitted only to a High Court judge who has had at least five years' standing and then the information should only appertain to issues that endanger public and state safety.

In response Committee chairwoman Barbara Hogan (ANC) urged Sacob to reconsider its request: 'when dealing with economic crimes, there must be a mechanism,' she said.

Chairman of the Afrikaanse Handelsinstituut (AHI) tax policy committee also raised his concerns. Willie Boonzaier, told the Business Day online news service: 'We support every attempt to reduce the crime rate in South Africa. One must, however, expect a reluctance by wrongdoers to declare any ill-gotten gains for tax purposes, if there is a risk that Sars will reveal their identities to prosecuting authorities.'

The AHI was against the proposal that the SARS Commissioner in particular be given the power to order the disclosure of information, he said: 'Our view is that an objective third party, ie the court, should be charged with this duty.'

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