The release of the long-awaited South African Revenue Service (Sars) Service Charter has been met with concern and disappointment, but also delight.
It’s been described as a document with very few undertakings, and very many limitations on when Sars will comply with these undertakings. The last charter that was published in 2007 disappeared around 2012, and the release of a new charter at the start of the annual tax filing season has been welcomed.
According to the charter, Sars will aspire to contribute to the economic and social development of the country; encourage tax, customs and excise compliance; counteract fraud and corruption; commit to a service that is fair, accurate and based on mutual trust and respect; and endeavour to adhere to reasonable timeframes.
Patricia Williams, partner at law firm Bowmans, says the timeframes in the charter are very possible, and in her view far too easy to achieve. Sars has set itself an extremely low service level, in most instances either only an undertaking to “endeavour” to do something that is supposed to be an absolute requirement in terms of the law, or a lengthy turnaround time where the law does not provide specific time frames.
“Framing an obligation as being something that Sars should try to do, as opposed to actually doing, is contrary to Sars’s obligations in terms of the Constitution and the Promotion of Administrative Justice Act to behave fairly and reasonably,” says Williams.
Sars will endeavour to answer calls within four minutes during peak season, and one minute outside peak season. It will endeavour to contact taxpayers within a week where additional “specialist” support is required. The tax collector will endeavour to respond to a tax, customs or excise query within
21 business days (one month) of receipt.
Williams raised concerns about urgent matters. Surely there should be a separate or priority channel for certain categories of queries, with Sars then responding within a day or two, she says.
Ferdie Schneider, head of tax at BDO South Africa, says the timeframes are rather ambitious given the size of the organisation and the multitude of taxpayers the tax collector has to deal with. He says he is quite satisfied with the fact that Sars has “endeavoured” to commit itself to fair and reasonable service. Doing the best they can should go a long way.
Schneider, a member of the South African Institute of Tax Professionals Vat work group, believes the release of the charter is quite commendable given the years of delay. He attributes it to the work of acting commissioner Mark Kingon, the “new broom” at Sars. Kingon stated earlier that the charter is a living document and will be tweaked if necessary.
However, the issue of refunds remains a thorn in the side of taxpayers and it appears that the commitments in the charter do not address them. The charter states that if no other debt is due, all other obligations have been met, Sars’s control processes have been adhered to, and no inspection, verification or audit is required, then Sars endeavours to repay the refund within seven days of finalising the “final assessment”.
These endeavours are only applicable to the current year’s refunds. “This is not permissible in terms of section 190 of the Tax Administration Act, which provides that Sars must pay a refund where a taxpayer is entitled to this refund.” In practice, there are often outstanding refunds relating to more than one tax period (an audit related to an earlier tax period may take an extended period of time to complete).
South African Institute of Tax Professionals CEO Keith Engel says in terms of the “commitments” related to the payment of refunds, all the current excuses for not releasing refunds will survive. Williams expressed concerns about only receiving a refund within seven business days of finalising the “final assessment”.
The Tax Administration Act does not refer to a “final assessment”, but only an amount refundable where reflected in “an assessment”. Sars is not entitled to withhold a refund simply because there may be a later assessment.
In the charter, Sars places an obligation on taxpayers to “encourage” others to pay their taxes and duties on time and in full. Williams says there is no such obligation, either in terms of tax legislation or the Constitution.
Williams agrees that there is an obligation to provide correct information to Sars, but in her view there is no legal obligation to take any active steps regarding other people’s tax affairs.