Challenges that the commissioner for the South African Revenue Service’s information gathering powers pose to taxpayers’ rights

Abstract

This study is about the importance of the duty of the South African Revenue Service (“SARS”) to recognise and protect taxpayers’ rights. Particular focus is placed on the challenges posed with respect to taxpayers’ rights when the Commissioner for SARS (“the Commissioner”) exercises his information gathering powers. This study covers the manner in which the gathering of information by SARS is conducted domestically and internationally and the purposes for which SARS uses that gathered information. The term “information gathering” is not defined in the Income Tax Act 58 of 1962 (“ITA”) or the Tax Administration Act 28 of 2011 (“TAA”). It may, however, be understood to mean the way in which the Commissioner gathers or collects information from taxpayers. The purpose of this information gathering may be for the Commissioner to measure taxpayers’ compliance with their obligation to pay tax. The Commissioner may use the following ways or methods to gather information from taxpayers: records and books, tax returns, request for information from taxpayers or third parties, inspection, verification or audit, search and seizure, exchange of information with other countries, Country-by-Country Reporting, the Voluntary Disclosure Programme and the Reportable Arrangements provisions. The study discusses how taxpayer’s constitutional rights may be infringed when the Commissioner uses these various methods to gather information from taxpayers. The study also discusses the effectiveness of the remedies or avenues available to the taxpayers whose rights have been infringed. The study entails a comparative study of the United Kingdom (“UK”) and Canada, and compares the relevant positions in these two countries on the above matters with the position in South Africa. The aim of this comparison is to develop recommendations for solving the challenges identified in South Africa.