Taxpayers can now apply for Advance Tax Rulings to the South African Revenue Service and which includes Binding Private Rulings.

The Constitution of South Africa requires just administrative action and accountability by organs of the state. Principles of our law, such as that of legitimate expectation, have forced the South African Revenue Service to reconsider the process to be adopted when giving rulings on matters.

We now have a legislated approach and whereby the South African Revenue Service will give rulings, including Binding Private Rulings, under a newly introduced Advance Tax Ruling System. It genuinely appears that this process will add significant value to our tax system, however, the jury is still out whether it will practically operate smoothly.

We have submitted various Advance Tax Ruling requests to the South African Revenue Service and this is all done through e-filing. These clients tend to be large companies who require certainty in law on a given tax treatment. Although tax advisors (such as ourselves), accounting practices, law firms and counsel may issue opinions, the answer is seldom clear cut. Even where the client receives an opinion, statutory auditors or the South African Revenue Service may not necessarily agree therewith and challenges are costly to defend.