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South Africa Clarifies Taxpayers' Rights In Disputes

by Lorys Charalambous,, Cyprus

04 November 2014

Following the release of a detailed guide on the resolution of tax disputes, the South African Revenue Service (SARS) has issued two new guides on "what to do if you dispute your tax assessment," and a "quick guide" to Alternative Dispute Resolution.

New dispute resolution rules are contained in the new Tax Administration Act, which was enacted on October 1, 2012. The rules have been applied since July 11, 2014, and confirm among other things that, once an assessment has been raised, a taxpayer may request the reasons for it in writing, together with details of the grounds of objection within 30 business days.

If dissatisfied with the decision of SARS following that objection, a taxpayer may then appeal that decision, and may also, if SARS's decision after the appeal is still unacceptable, make use of the ADR procedure, where an out-of-court resolution is sought by both parties.

Otherwise the dispute could be resolved through the Tax Board or Tax Court (tribunals created under the TA Act), depending on whether the amount of the tax disputed is below or above ZAR500,000 (USD45,250), respectively.

The ADR procedures, for both individuals and businesses, are meant to be less formal, less cumbersome, and less adversarial, and are intended to offer a more cost effective and speedier process of resolving a dispute with SARS. A taxpayer or SARS can initiate an ADR, but SARS has the final decision as to whether a matter is suitable to be processed under it.

The ADR process must be concluded within 90 days. According to the guidance, both parties participate in the proceedings with full reservation of their rights; and ADR proceedings are not intended to be on record, and any representation made, or documents tendered in the course of such proceedings is made or tendered without prejudice.

A dispute subjected to the ADR process may be resolved by agreement or settlement between the taxpayer and SARS. However, if ADR is unsuccessful, the matter can proceed to the Tax Board or Tax Court, after a number of formalities, including a pre-trial conference, during which both parties must attempt to reach consensus on the evidentiary issues.

Finally, the taxpayer and SARS may still resort to the High Court or Supreme Court of Appeal, if one or both are still unhappy with a Tax Board or Tax Court judgment.

The new rules are intended to simplify the old rules, to enhance the understanding of and compliance with them, and shorten procedures in order to improve turnaround times for finalizing disputes. They are also intended to establish a better balance between taxpayer rights and remedies and SARS's powers and duties.

TAGS: individuals | court | South Africa | compliance | tax | business | tax compliance | law | legislation | Africa | Tax

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