New Tax Dispute Resolution Process Promises Faster, Less Costly Outcomes

A significant change proposed in the Draft Tax Administration Laws Amendment Bill could soon make resolving tax disputes with the South African Revenue Service (SARS) quicker and more affordable. The bill introduces the alternative dispute resolution (ADR) process much earlier in the dispute timeline, allowing it to be accessed at the objection stage rather than only at the appeal stage.

Currently, taxpayers can only use ADR after lodging an appeal, often resulting in lengthy and costly processes. By enabling ADR at the objection stage, the new approach aims to expedite resolutions and reduce costs, benefiting both taxpayers and SARS.

Additionally, the bill proposes extending the time allowed for lodging an appeal. Under the current rules, taxpayers must appeal within a set period, or their appeal becomes invalid. The new bill introduces a provision allowing the tax court to extend the appeal period by up to 120 business days if it is deemed “in the interest of justice.” This change offers more flexibility for taxpayers facing complex disputes.

Tax practitioners have welcomed these proposed changes, seeing them as a positive step towards more efficient and accessible tax dispute resolution. However, there are still questions regarding the specifics of the new process, including timeframes and the ability to appeal if ADR at the objection stage fails.

Interested parties have until the end of August to comment on these amendments, which could significantly reshape how tax disputes are managed in South Africa. For tax practitioners, these changes promise quicker resolutions and reduced resources needed to handle disputes.