Key Changes Proposed for Taxpayers in South Africa
The South Africa Revenue Service (SARS) has published a draft notice outlining proposed changes to its record-keeping requirements.
Under the proposals, taxpayers are required to retain relevant records, books of account, and documents for a period of five years, said specialist advisory firm Tax Consulting SA.
“It is important to note that such supporting materials must be kept in the prescribed form and manner. Specific requirements apply where these materials are kept in electronic format, as prescribed by the Commissioner for SARS in a public notice.”
Too often, taxpayers seem to forget that the most important aspect of dealing with SARS is to ensure that they can discharge their burden of proof, Tax Consulting SA said.
“As a taxpayer, it is on you to provide SARS with the relevant material that, on a balance of probabilities, supports your position.”
The firm outlined the requirements proposed in the notice and how these records should be kept.
‘Acceptable electronic form’
Electronic records must be kept in an ‘acceptable electronic form’.
This means a form in which the integrity of the electronic record satisfies the standard contained in section 14 of the Electronic Communications and Transactions Act, and that may be accessed by SARS for purposes of performing their administrative duties under the Act, said Tax Consulting SA.
In addition, the person required to keep the records must be able to, within a reasonable period when required by SARS, either:
- Provide an electronic copy of the records in a format that SARS can readily access, read and correctly analyse; or
- Send the records in an electronic form that is readily accessible by SARS; or
- Provide SARS with a paper copy of the records.
The draft public notice proposes that sending the records in an electronic form or providing to SARS a paper copy thereof be removed.
Rather, the only manner to provide to SARS the electronic records, when requested to do so, will be to provide an electronic copy thereof to SARS in a format that is readily accessible, readable, and correctly analysable.
It is proposed that when providing the electronic copy, the person will also have to provide the following:
- Database records on delimited, Microsoft Excel or similar format; and
- Records that substantiate database records, such as supplier invoices, purchase orders, bank statements, in a portable document or similar format.
Location of records
Electronic records must be kept and maintained at a place physically located in South Africa. However, a senior SARS official may authorise a person to keep the electronic records at a location outside South Africa if they are satisfied that the person complies with further conditions.
The draft public notice proposes that if a person wants to keep the electronic records outside South Africa they will now have to sign and submit a declaration to SARS via email.
In addition, in the case of a person who is not a South African resident but is liable to register for VAT under section 23(1A) of the Value Added Tax Act, the natural person responsible for their VAT affairs must also sign and submit such declaration.
“Save for the above two proposed changes, the remainder of the electronic recordkeeping requirements will remain the same. The draft public notice is open for public comments until 25 June 2021,” Tax Consulting SA said.
“It is encouraging to see that SARS is once again on par with technological developments, thereby ensuring that they can effectively execute their mandate in an everchanging environment.”