Sars, banks sign tax accord

4 February 2009

The South African Revenue Service (Sars) and the Banking Association of South Africa have signed an accord to improve the levels of tax compliance countrywide.

Briefing the media at the signing of the accord in Johannesburg last week, the Banking Association’s Steven Booyesen said the agreement established a platform for constructive interaction between the industry and Sars.

“We’ve been engaging Sars over the years to formalise a constructive relationship,” Booyesen said. “We are a critical element of the economy of the country and we believe it is appropriate that we indicate the importance of establishing sound interaction between business and Sars.

“We are totally committed to sound tax morality and continue to endeavour to instil sound tax practice across the industry.

Promoting tax compliance

The accord encourages the banking industry to promote tax compliance, both within banks and their clients, to periodically determine the effective tax rate of banks, and to regularly engage with Sars to resolve any matters of dispute.

It also provides greater certainty on the interpretation and application of tax and custom laws, and the identification of tax risks.

On the other hand, the accord encourages Sars to dedicate specific resources to the banking industry and ensure professionalism in the services they provide to the industry.

Sars commissioner Pravin Gordhan explained that the accord would establish a framework for cooperation between the parties to discourage impermissible tax arrangements, while also enhancing their own services.

“As Sars, we are committed to offering dedicated services to the banking industry through the Large Business Centre, which will include the appointment of a taxpayer relationship manager to focus exclusively on the banking industry,” he said. “We will deepen our understanding of the banking industry in terms of building technical and professional skills.”

‘Higher tax morality’

Gordhan said the revenue service also aimed to offer an advance ruling system that would be responsible for, and facilitate, tax certainty for banks and the industry as a whole. It would also promote the highest standards of tax compliance and also discourage practices that were inconsistent with the law.

“The framework will promote exemplary service offerings to the banking industry, while pursuing a climate of higher tax morality,” he said.

Once accepted by both the banking industry and Sars, the framework has the potential to be translated into industry standards.

Source: BuaNews