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Articles: Tax experts oppose penalties

Posted by admin on Saturday, March 18, 2006 - 09:59 AM

CAPE TOWN — Tax practitioners have objected to a proposal to impose penalties on people promoting abusive tax-avoidance schemes and on taxpayers who understate their income substantially.
Linda Ensor

This emerged from a written response by the South African Revenue Service (SARS) to submissions made on its tax-avoidance discussion paper released in November. The do*****ent was presented to Parliament’s finance portfolio committee yesterday. However, there was general acceptance of the need for a stronger and more effective provision in the Income Tax Act to prevent tax avoidance, the SARS response do*****ent said. A bill to replace the largely ineffective section 103 of the act is expected to be tabled in Parliament later this year. Tougher penalties in SA would be following the lead of countries including Australia, New Zealand and the US, SARS said. “Promoter penalties represent a response to the growing recognition that a significant portion of the problem is driven by the ‘supply side’ of the equation rather than taxpayer demand,” it said. SARS acknowledged, however, concerns for a distinction between the promoters of tax-avoidance schemes and advisers who simply gave tax advice. SARS tax expert Ed Liptack said unlawful tax avoidance had been “staggering” in size. Tax havens alone held about $11,5- trillion worth of assets with up to $435bn lost in taxes, he said.

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