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Dear Corruption Watch, 


The new Tax Administration Bill, about to be promulgated, will provide SARS officials with search and seizure powers. I wonder if you might be able to provide clarity as to how these powers might be used (or abused) in respect of corruption? I'm particularly interested in their application to the notorious "under-invoicing" practised in respect of imported goods. Yours, Tax Shy


Dear Tax Shy,


SARS has said that the new Tax Administration Bill (TAB) was tabled in order to enhance compliance with tax laws. Their chief concern is that delays in investigations can often result in the destruction of records and documents. In other words, the delay in getting a search warrant may make the purpose of that search warrant academic by the time it is obtained.


This is not a new challenge. Obviously there are competing rights. The individual citizen has a right to privacy. Government is mandated to enforce the law. In order to strike the right balance between these rights and obligations certain guidelines and safeguards have developed over time, most notably in our law on criminal procedure .


So, for example, clause 63 of the TAB, relying on the sensible principles developed in criminal law, only permits a warrantless search  if a senior  SARS official on reasonable grounds is satisfied that:


  • there may be an imminent removal or a destruction of relevant material likely to be found on the premises;
  • if SARS had applied for a search warrant it would have been granted anyway; and
  • the delay in obtaining a warrant would defeat the object of the search and seizure.


This formulation closely mirrors the guidelines set out in the Criminal Procedure Act for warrantless search and seizures. Clause 63 provides two further safeguards: the search my only be carried out in the same manner and subject to the same statutory limitations as a search warrant in terms of clause 61; and a SARS official may not enter the property without the consent of the occupant. These powers afforded to SARS are not unique . Other statutory bodies such as the Financial Services Board and inspectors under the Civil Aviation Act have warrantless search and seizure powers.


The concern expressed by SARS is that there is a great deal of corruption at our ports and other points of entry where officials are complicit in under-invoicing imported goods resulting in massive loss of revenues.


Our Constitutional Court has recognised that there will be limited circumstances in which the need of the state to protect the public interest justifies warrantless searches. Revenue bodies in other countries have similar powers. The situation is therefore not unique and its focus is narrow.


This issue is difficult to address in theory and one would have to see how it plays out in practice. For obvious reasons the citizenry is, and should be, wary of any infringement of its rights. At the same time those taxpayers who are compliant would probably not shed too many tears if the crooks are collared. Apparently, according to SARS, most taxpayers are compliant and it is the view of SARS that the TAB would ensure lower compliance costs in the area of importation.


Although it may be slightly overstating the case it is difficult to meet the argument that if you are not breaking the law it really shouldn't bother you if SARS knocks on your door and asks to inspect your premises.  The emphasis of course is on “knocks”, not knock-down.


Take a stand and report an incident of corruption. This article originally appeared in the Sunday Times Business Times on 5 August 2012.

The new Tax Administration Bill, about to be promulgated, will provide SARS officials with search and seizure powers. I wonder if you might be able to provide clarity as to how these powers might be used (or abused) in respect of corruption? I’m particularly interested in their application to the notorious “under-invoicing” practised in respect of imported goods.