Finance Bill review: More time needed please!

There is precedence in relation to the difficulties that taxpayers/industries have with changes that require system changes. For example the introduction in the 2016 Budget of VAT on financial services, a change that took the banks a few months to get their systems ready; on top of this there was confusion regarding the process for VAT registered taxpayers to reclaim the input VAT. Again, the introduction of e-stamps for beer, spirits and cigarettes had to be postponed a few times as systems were taking longer to configure (including answers to valid queries regarding returns, breakages etc) than expected. 2013 saw the introduction of excise duty on money transfer with percentages applicable for specific transfer amounts, something which required a lot of configuration by the telecommunication industry; and then just a year later it was agreed that the tax was not sensible and it was repealed. Ultimately a lot of unnecessary cost and inconvenience to affected taxpayers and tax administrators.

Finally, the TRA can be more comprehensive in its issue of guidance (i.e. its interpretation) of tax provisions, especially new ones. For instance, the Finance Act 2020 introduced the concept of a new concept of “representative assessee” which has led to some confusion on (i) who is captured by these provisions, (ii) how to report them and (iii) what is the process. The issuance of guidance to taxpayers by a tax administration can help (i) provide further certainty to taxpayers, (ii) increase voluntary compliance, (iii) reduce tax disputes and (iv) demonstrate the goodwill of the tax administration. In some countries (eg the United Kingdom), the internal manuals of the tax administration are publicly available to anyone and these serve as guidance. However, even closer to home, a quick look at the website of the South African Revenue Service shows a whole plethora of guidance (called Guide) available. The TRA has issued some guidance (domestic withholding tax in 2019 and transfer pricing guidelines 2020) but more could be done.

Finance Bill review: More time needed please!

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