ATC201202: Report of the Select Committee on Finance on the 2020 Taxation Administration Laws Amendment Bill [B28 - 2020] (National Assembly- section 75), dated 02 December 2020

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Report of the Select Committee on Finance on the 2020 Taxation Administration Laws Amendment Bill [B28 - 2020] (National Assembly- section 75), dated 02 December 2020

Introduction and background

The Minister of Finance first introduced the draft version of the 2020 Taxation Administration Laws Amendment Bill (TALAB) during the February 2020 National Budget tabling. The TALAB was formally tabled in Parliament on 28 October 2020, together with the Medium Term Budget Policy Statement (MTBPS).

On 12 November 2020, the National Council of Provinces (NCOP) formally referred the TALAB to the Select Committee of Finance (SeCOF), for consideration and report, after the Standing Committee on Finance (SCOF) voted on it on 11 November 2020. The National Assembly (NA) passed the Bill on 17 November 2020.

In terms of a procedure followed to process the TALAB, the Committee received a briefing by the National Treasury and the South African Revenue Service (SARS) on 17 November 2020. The Committee held virtual public hearings on 24 November 2020. It received two written submissions from the South African Institute of Chartered Accountants (SAICA) and Webber Wentzel.

1.Overview of the amendments in the 2020 TALAB

The objective of the 2020 TALAB is to:

  • Amend the Estate Duty Act, 1955, so as to make textual corrections.
  • Amend the Income Tax Act, 1962, so as to delete obsolete wording; to make a decision subject to objection and appeal; to enable Public Benefit Organisation (PBO) to provide funds and assets to any department of government of the Republic and effect consequential amendments relating thereto; to align provisions to provide that only approved PBO can provide certain certificates; to provide that audit certificates must be obtained and retained by certain organisations; to align situations where withholding tax on royalties was due and payable but subsequently becomes irrecoverable with that of withholding tax on interest; to provide that certain entities be excluded from the definition of provisional taxpayer; to align the wording with certain current processes and remove a reference to a deleted provision; to modify the requirement of intent for certain criminal offences; to effect a consequential amendment; and to replace a reverse onus provision with an evidentiary burden.
  • Amend the Customs and Excise Act, 1964, so as to make technical corrections; to extend a provision concerning information sharing and to exclude certain information from the application of the prohibition on disclosure of information; to clarify the movement in bond of containerized goods on the strength of a manifest and without furnishing security to licensed container depots or container terminals appointed or prescribed; to clarify how bills of entry may be adjusted; to broaden provisions relating to the disposal of goods on failure to make due entry on importation to also include failure to make due entry on exportation of goods on which export duty is payable; to provide for the commencement of liability for export duty; to provide for the liability of the master of a ship or pilot of an aircraft or other carrier for duty on goods deemed imported to cease upon delivery of the goods to a licensed remover in bond, for the assumption of such liability by a licensed remover in bond, as well as for the circumstances in which liability of the licensed remover in bond will cease; to clarify the meaning of ‘‘free on board‘‘ in relation to goods exported; to provide for the limitation of the period for applications for refunds of export duty; and to broaden a provision relating to the production of permits or certificates required in respect of imported goods to apply to exported goods as well.
  • Amend the Value-Added Tax Act, 1991, so as to substitute the requirement to submit a return with the obligation to obtain, complete and retain the form prescribed by the Commissioner; to substitute obsolete wording; and to modify the requirement of intent for certain criminal offences;
  • Amend the Skills Development Levies Act, 1999, so as to provide that the Commissioner may refuse to authorise a refund if a return is outstanding;
  • Amend the Unemployment Insurance Contributions Act, 2002, so as to provide that the Commissioner may refuse to authorise a refund if a return is outstanding;
  • Amend the Tax Administration Act, 2011, so as to provide for a textual correction in order to clarify certain terminology; to provide for consequential and technical amendments; to provide for the issue of assessments based on an estimate where a taxpayer provides relevant information that is incomplete or inadequate or does not respond to a request for relevant material; to amend the period within which a reduced assessment can be requested; to align the period within which an extension may be granted with the period for prescription; to provide for a specific effective date with regards to interest calculated on an erroneous overpayment of tax; to provide for interest on royalties payable in terms of the Mineral and Petroleum Resources Royalty (Administration) Act, 2008 and to provide for the interest rate with regards to refunds due under that Act; to provide that a refund does not need to be authorised where a matter is under criminal investigation and to modify the requirement of intent for certain criminal offences, and to provide for matters connected therewith; and
  • Provide for matters connected therewith.

2.Issues raised by the stakeholders

On the requirement of “wilfulness” for certain statutory offences, a stakeholder noted that the National Treasury has now categorised the offences into two categories, (1) those for which intent or negligence is required and (2) those for which intent is not required. The Stakeholder’s concern is that simply forgetting to submit a return on time, for example, or not realising that one was over the relevant threshold for registration would now constitute negligence and thereby a criminal offence. A further concern is that while SARS may choose not to prosecute for administrative ‘mistakes’, the legislation gives SARS the power to do so until SARS seek prosecution by laying a charge with the South African Police Service (SAPS) or National Prosecuting Authority (NPA). According to the Stakeholder, this means that in instances where you have three taxpayers who have committed the exact same criminal tax offence, a SARS official has a discretion to do nothing, to impose a civil sanction or to lay a compliant for a criminal sanction without any objective legal requirements as to how he/she decided on such sanction.

The recommendation made was that the purely administrative instances of non-compliance should merely be subject to civil sanction or only criminalised for repeat offenders who, through their conduct, show a pattern of intent to undermine the fiscus.  Also, the list of offences in section 234 of the Tax Administration Act (TAA) should be reconsidered and only actions that are extremely objectionable to society should be criminalised. A further recommendation is that sections 234 – 237 of the TAA should provide an objective and clear standard of proof to compel the referral by SARS of criminal offences for prosecution to the NPA.

On the removal of the requirement to prove intent from certain statutory tax offences, the SARS’s response was that the use of negligence as a standard of culpability has been recognised in the Constitutional Court and is well established in statutory law. It explained that, in this context, a taxpayer would be negligent if they did not maintain a standard of reasonable care as would be expected of a reasonable taxpayer in the same circumstances - in short, “unreasonable non-compliance”. It further said that it is only if the prosecution can prove this beyond reasonable doubt that the taxpayer is guilty of an offence.

On the issue of not notifying SARS of a change in address, failing to appoint a representative taxpayer, submitting an erroneous or incomplete document and neglecting to make a document available, the response was that these may appear to be minor administrative compliance issues but they are not. SARS explained that the obligation to notify SARS of a change in address is critical for contacting a taxpayer prior to notice and the institution of recovery proceedings which require a current address for “service” of legal documents. It further clarified that in the absence of a representative taxpayer there is no person who can be held accountable for a company’s defaults, for instance. Regarding erroneous or false documents, SARS said that there is only a criminal offence if there is a wilful submission of false documents and that full disclosure is fundamental to the administration of the tax system.

On a comment which suggested that criminal sanction should only be for repeated administrative offences and that these minor offences should be subject exclusively to civil sanction, SARS emphasised that failure to submit personal and corporate income tax returns are subject to administrative penalties, which escalate the longer a default continues. These administrative penalties, it said, assist in ensuring compliance but are far from a panacea and that there are multiple drivers for the poor compliance.  

A comment was made that SARS officials choose who to prosecute without oversight or transparency and that an objective and clear standard of proof should be imposed to compel prosecutions. SARS said that it is confronted by widespread non-compliance in South Africa and it must thus prioritise the application of its scarce criminal investigation resources to maximise their impact on overall compliance. It further said that attempting to craft a rule that all offences must be investigated and charges laid is simply unworkable in practice and that it is incorrect to state that there is no oversight as SARS is required to act administratively fairly and in accordance with the rule of law under the Constitution.

With regards to the issue of notification on requests for information, the issue raised was that there are many examples where taxpayers were not aware of requests for information, as the method of communication was uploading a letter on the taxpayer’s or tax practitioner’s eFiling profile, without notification that the correspondence had been uploaded. The recommendation was that requests for information must be sent via multiple communication platforms. SARS’ response was that its eFiling previously permitted taxpayers to specify whether they wished to receive emails when documents were placed on their eFiling profiles. This option, it said, has recently been done away with and eFilers will be notified by email automatically when key documents are placed on their eFiling profiles. This includes requests for supporting documentation and unfortunately this will not assist eFilers who have not provided SARS with current email addresses. The stakeholder was encouraged to engage with the SARS’ technical team through SARS stakeholder relations, if difficulties are still being experienced.

While noting the concerns expressed by the stakeholders, the Committee feels that South African Revenue Service’s responses were sound and agrees with the amendments.  


The Select Committee on Finance, having considered and examined the Taxation Administration Laws Amendment Bill [B28 - 2020] (National Assembly – section 75), referred to it, and classified by the JTM as a section 75 Bill, accepts the Bill.


Report to be considered



The Democratic Alliance reserves its position on the report.

Economic Freedom Fighters and Freedom Front + rejected the report.  



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