While South Africa has the unfortunate distinction of being one of the top countries in the world where fraud and corruption are rampant, it is also one of the few countries in the world where the public is very protected against this once they are able to prove that they have fallen prey to it. Government has taken a further step in improving this protection through the establishment of the office of the Tax Ombud.
Like the various other Ombudman in the country, the purpose of the Tax Ombud is to improve the relationship between the public and the South African Revenue Service (SARS) by offering an effective conflict resolution channel between the two parties. Retired High Court judge Bernard Ngoepe was appointed as the first Tax Ombud and will serve a three year renewable term.
The office of the Tax Ombud has legislative backing and was established following the directives of sections 14 to 21 of the Tax Administration Act (TAAct) of 2011.
The TAAct amalgamates, integrates and streamlines the administrative provisions of tax laws in order to decrease the administrative burden and compliance costs borne by taxpayers and SARS. The act seeks to promote a better balance between the powers and duties of SARS and the rights and obligations of taxpayers. The Ombud was established to be an independent, impartial and objective redress channel for aggrieved taxpayers to approach for help to resolve matters relating to service, procedure and administration.
Ngoepe points out that the Tax Ombud will have a close relationship with the Commissioner of SARS as well as Finance Minister Pravin Gordhan. Ngoepe will also be expected to submit quarterly reports to Gordhan outlining the health of the industry as well as any issues which it has picked up.
However, if you are expecting the Tax Ombud to make decisions which compels SARS to take a particular course of action, you are out of luck. Ngoepe points out that the business model of the Ombud is based on the duties and powers of the Canadian Tax Ombud and the UK's Her Majesty's Tax and Customs. The Tax Ombud will therefore have limited powers and can only advise SARS on an appropriate course of action. It cannot make decisions which are recommendations to SARS and tax payers. These decisions are not binding.
"If SARS chooses not to accept a decision made by the Ombud, this will be included in the quarterly report which the Ombud submits to the minister. So we are assuming that SARS won't ignore to many recommendations made by the Ombud,” says Ngoepe. Respected tax industry analyst Dr Beric Croome adds further weight to this by pointing out that he has not come across an incident where a tax authority has not complied to recommendations made by a Tax Ombud as it will be a bad reflection on the authority.
Staffing and resolution time frame
One of the features of the many Ombudsman in South Africa is that they are all staffed by some of the best legal minds in the country as well as support staff which have sufficient industry experience to make proper, fair decisions on matters. The office of the Tax Ombud is no exception. The office will be lead by one of the most respected retired judges in the country and will be staffed by employees which the office has seconded from SARS or by former SARS employees which the office has drawn out of retirement.
While this means that the Ombud will have the necessary capacity to effectively resolve matters of dispute, it will be difficult for the Ombud to give the impression that it is an independent body which is not affiliated with SARS.
"We have made the physical separation from SARS so that we can show the public that we will be independent from SARS. Naturally there will be a lot of consultation between us and SARS, but this will only be to find out all of the information relating to a case as well as finer application points of TAAct. All of the staff working for the Tax Ombud, whether they are seconded SARS employees or SARS employees taken out of retirement, will be fully committed to the Office of the Ombud,” ensures Ngoepe.
Proving this independence may be harder than a mere physical separation and Ngoepe's assurances on the staff's commitment. This is currently the case with the FAIS Ombud which has identified rumours regarding its independence as a major challenge that needs to be overcome.
One of the most frustrating aspects of an Ombud office is possibly the length of time that disputes are resolved. Ngoepe assured the press at the launch of the Ombud that provided all internal processes within SARS have been exhausted and all of the documentation has been properly filled in, disputes will be resolved within 10 to 15 working days. "This will obviously be dependent on the nature of the dispute. But we have settled our first dispute within 10 days of receiving it, and it was a complicated dispute,” says Ngoepe.
Improving the relationship between the public and SARS is important, but won't be easy to achieve, especially if the rumours regarding the aggressive collection tactics of SARS proves to be true. It is important that the Ombud is independent from SARS and that it makes this clear to the public. However this will also prove to be difficult if it is staffed by ex-SARS employees. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts firstname.lastname@example.org.