Taxpayer Confidentiality To Be Lifted In South Africa

by Robert Lee, Tax-News.com, London

20 February 2002

There are fears that recent changes to South African tax legislation which allow the tax authority to share taxpayer information with other bodies may be the thin end of the wedge in terms of the erosion of financial privacy.

Previously, secrecy laws governing the South African Revenue Service (SARS) meant that tax officials were not permitted to disclose confidential information about taxpayers under any circumstances. However, following amendments to the Income Tax and VAT Acts, the SARS is now permitted to waive confidentiality obligations in the case of serious non-tax criminal offenses, and can report to law enforcement agencies, prosecution authorities, and the Treasury.

Opinion is divided amongst the country's tax experts as to whether this is a positive step, with some professionals welcoming the recent moves and arguing that crime rates will be reduced as a result, and others fearing that taxpayers might be discouraged from making full disclosure to the tax authorities.

SA-based Tax Manager for Deloitte & Touche, Melissa Roelofse revealed to the South African newspaper Business Day on Tuesday that she had mixed feelings on the issue, but welcomed the fact that the disclosure order could only be issued by a High Court Judge. This limitation, according to Ms Roelofse, was put in place so that 'sufficient protection could be achieved for both the SARS and taxpayers.'

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