Technical amendments to legislation, a lack of capacity by the authorities and advisers, and taxpayer resistance to continue paying taxes in the face of heightened corruption were highlighted on Tuesday at a tax conference as major challenges affecting the tax landscape.
Tax professor at Rhodes University Matthew Lester expressed concern about dwindling tax collections amid declining economic growth, with only 3.8-million out of more than 13-million registered taxpayers contributing to personal income tax.
He said the level of corruption in South Africa had taxpayers "so angry" that it was having a major effect on tax collections. Prof Lester questioned the design of the collection and distribution process where the South African Revenue Service (SARS) and the Treasury were responsible for collections, but a myriad of national, provincial and local departments and institutions were responsible for the distribution, without proper control measures.
International tax risks are driven by the focus on the erosion of tax bases, profit shifting by companies, country-by-country reporting and an accelerated shift towards indirect taxes, said Deloitte tax services head Nazrien Kader.
Osman Mollagee, a partner in the international tax services division of PwC, said views on what constituted tax evasion and legal tax planning were blurred. The role of tax advisers was to educate stakeholders on their tax responsibilities, but also to "stand their ground" on legitimate tax planning.
Edward Nathan Sonnenbergs tax executive Beric Croome said the Bernard Ngoepe aimed to protect the rights of taxpayers, not to undermine them, and the appointment of the tax ombud Bernard Ngoepe was a step in the right direction, although there were some reservations about the independence of the office since it will operate from within SARS.
Dr Croome said the tax ombud will not be involved in legal disputes between taxpayers and the tax authority but will focus on abuse of power by SARS officials, administrative issues and systemic problems with legislation.
But he is concerned about a cost-effective remedy for taxpayers in cases where SARS does not fulfil its legal obligations.
The South African Institute of Chartered Accountants is currently hosting a two-day tax conference in Joburg aimed at addressing the changes in the tax landscape.
Picture source: SOWETAN
BY AMANDA VISSER
Article Source: Business Day