1. What is the most significant change to your region/jurisdiction’s tax legislation or regulations in the past 12 months?
In my practice area, dispute resolution in South Africa, the most significant anticipated changes are expected in the first half of 2025, where settlement of tax disputes may be extended to disputes that are still at the objection stage. Currently, the Tax Administration Act, 2011 (Act No. 28 of 2011) permits the settlement of disputes at the appeal stage. The intention is to finalise disputes earlier and reduce the costs of finalising tax disputes for both the taxpayer and the revenue authority.
2. What has been the most significant impact of that change?
It has been a welcome amendment, as taxpayers are now able to properly consider and consult with their advisers before lodging an objection to an assessment. There is no need for taxpayers to request an extension for lodging an objection after the 30 business days from the South African Revenue Service [SARS] have lapsed. Earlier, when requesting an extension, there was always a risk that SARS may deny the extension, and this had the potential to increase the costs and time period for resolving the dispute.
3. How do you anticipate that change impacting your work and the market moving forwards?
The change will enable the Deloitte South Africa tax controversy and dispute resolution team to do more consultations with taxpayers/clients and consider more options before lodging an objection to an assessment. We are hopeful that this will translate to more disputes being resolved at the objection stage in the future. A further positive development is that further amendments have been proposed to the rules to allow an alternative dispute resolution [ADR] process to be available at the objection stage.
4. How has this changed the way you offer tax advice?
It has allowed Deloitte South Africa to engage more extensively with taxpayers/clients, including their internal stakeholders, to help them think through the issues or disputes and the implications of potential outcomes before embarking on any recommended action(s). Clients are now able to consider the issues extensively and have more comprehensive internal consultations. This, in turn, enables Deloitte South Africa to better assist them in resolving disputes with SARS and/or lodge more-effective objections. This should also improve the clarity of the taxpayer’s/client’s instructions to the Deloitte South Africa tax controversy and dispute resolution team.
5. What potential other legislative/regulatory changes are on the horizon that you think will have a big impact on your region/jurisdiction?
Extension by mutual agreement between SARS and the taxpayer to attempt to resolve a dispute through ADR at the objection stage (currently, it is only permitted at the appeal stage) and the extension of the period within which an appeal may be lodged for up to 120 days; currently, it is up to 45 days.
6. What are the potential outcomes that might occur if those changes are implemented?
Positive outcomes are that the disputes should be resolved earlier at lesser costs to both SARS and the taxpayer, and clients will be able to appeal, while they would have been barred from doing so if they missed the 45-day extension deadline. The negatives are that the dispute process may take longer should the dispute not be resolved at objection, and the same SARS auditors that raised the assessment in dispute may be the same SARS official(s) tasked with trying to resolve the dispute.
7. Do you think that change will have a positive effect on both your practice and the wider regional/jurisdictional market?
It should positively affect the practice, as clients’ disputes should be resolved quicker, and the Deloitte South Africa tax controversy and dispute resolution team should be able to assist taxpayers/clients in the ADR process with SARS. If the dispute is unresolved, Deloitte South Africa can retry to resolve it at the appeal stage with different SARS officials in charge of the process (not the auditors who raised the disputed assessment).
8. Are there any regulatory/legislative changes you believe should be implemented in your region/jurisdiction?
It would be ideal if adherence to numerous timelines imposed in the various tax acts were relatively easy to enforce against SARS without requiring the taxpayer to bring a court action. Currently, it is relatively easy for SARS to enforce adherence by the taxpayers to the timelines.
9. How do you believe those changes would help improve the tax landscape in your market?
It would level the playing field when taxpayers are in a dispute with SARS. Currently, the audit, tax debt collection, and dispute resolution processes are skewed in favour of the revenue authority.
10. How are issues surrounding the taxation of the digital economy affecting your work?
The effect has been minimal in the tax disputes area, but we do assist taxpayers who have been identified as non-compliant with remission of any penalties or potential penalties where the revenue authority is considering to impose and engage with SARS to regularise their historical non-compliance or alleged non-compliance during audits.
11. How would you describe the tax authorities’ approach in your region/jurisdiction?
SARS often engages with taxpayers and potentially affected industries on proposed amendments, guiding the application of tax laws through tax interpretation notes and advance tax rulings. In many instances, SARS would engage with taxpayers through different channels designed to resolve queries not related to the interpretation of tax laws but relating to the revenue authority’s processes and to promote ease of tax compliance. In general, SARS strives to engage with taxpayers before any adverse action is taken against them and will not intentionally compromise the taxpayer’s sustainability or the status of their business as a going concern.
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