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The country must tackle the applications of complex legislation subject to interpretation

Despite substantial changes to the South African tax landscape over the past decade including greater vigilance and a shift in taxpayers’ attitudes to commitments, significant work remains on resolving complex legislation open to interpretation.

Deloitte KwaZulu-Natal business unit leader taxation services Nazrien Kader (Pictured right) says the sweeping changes to tax legislation has paved the way for taxpayers and practitioners to comment on proposed changes; sometimes drawing battle lines with the drafters of legislation.

The South African Revenue Services (SARS) has bolstered its manpower with particularly large business centre employees receiving their training via the accounting and legal professions and rather than being frivolous, queries typically demonstrate a commercial understanding.

Criticism that the high cost of compliance was onerous on predominantly the small medium and microenterprise sector saw SARS reduce the burden to those taxpayers, while the simplified 2008 tax return signalled another step towards “reducing the pain of tax compliance”.

“Yet, in reality the country must tackle the applications of complex legislation subject to interpretation."

"Contentious issues do not experience a meeting of minds and typically laws open to interpretation are not construed in the taxpayer’s favour, resulting in a lengthy, financially and emotionally-draining resolution process,” she says.

While acknowledging SARS has implemented dispute resolutions mechanisms and obligatory timelines, the costs and resources required to challenge issues “sometimes far outweigh the benefits of certainty and closure”.

Kader believes moving forward, there remains the perception that taxpayers who can afford tax advisors “fully intend and actually manage” to pay less than their due tax obligation.

Consequently, SARS will counter for more regulations and rigorous enforcement among practitioners.

Looking globally, she says as South Africa plays an increasing role on the world stage, SARS will follow international trends and adhere to promises to respond “proportionally to the behaviour of taxpayers and businesses”.

“Compliant, low-risk taxpayers will receive exceptional services. There will be service and education for those seeking compliance but not understanding their obligations and assistance and understanding for those who make honest mistakes,” she says.

The flipside is that the full weight of the law will be brought against anyone who knowingly does not comply and Kader is only cautiously optimistic that SARS will relent once those taxpayers demonstrate a willingness to “take their tax obligations more seriously”.

Nazrien Kader has been head of tax at Deloitte in KwaZulu-Natal for two years, in January 2009 she leads the Financial Services Tax Team in Johannesburg.