2 October 2006
By proclamation dated 23 September 2006, President Thabo Mbeki has set 2
October 2006 as the date on which the enabling legislation for the new Advance
Tax Ruling System is taking effect.
The System represents a major new service for taxpayers and is intended to
promote clarity, consistency and certainty in the interpretation and
application of the tax laws and, by doing so, help taxpayers to comply with the
tax laws.
The System authorises the Commissioner to issue two new types of rulings:
binding private rulings and binding general rulings.
Under this system, taxpayers may formally request a ruling from the
Commissioner in connection with the interpretation and application of the tax
laws to a specific proposed transaction, subject to certain limitations.
Provided that there is full disclosure of all material facts, the ruling
will generally be binding on the Commissioner when an assessment is made in
connection with that transaction.
The Commissioner will also publish all binding private rulings in an edited
form to protect confidentiality. This is being done to provide information and
guidance to taxpayers generally and to ensure that all taxpayers operate on a
level playing field. The binding effect only applies, however, to the applicant
who requested the ruling. The binding private rulings may not be cited as
precedent by any other taxpayer.
The Commissioner will begin to accept applications for binding private
rulings on 16 October 2006.
All applications must be submitted electronically through the ATR Service
Portal on the South African Revenue Service (SARS) e-Filing site
(www.sarsefiling.co.za). Applications may not be submitted manually.
Applications are subject to both an application fee and a cost recovery fee.
The application fee for Small, Medium and Micro Enterprises (SMMEs) is
currently R2 500. The application fee for all other taxpayers is currently R10
000. The cost recovery fee will generally depend upon the complexity of the
proposed transaction in question and the issues raised in the application.
In addition, the Commissioner will continue the practice of issuing
non-binding written opinions in response to taxpayer queries in connection with
current or proposed transactions. These non-binding private opinions will
continue to be free of charge. They may be requested at a taxpayer's branch
office.
Binding general rulings are written statements issued by the Commissioner,
in his (or her) discretion, in respect of the application or interpretation of
a provision of the tax law in respect of issues or matters of general interest
or importance.
These rulings are generally binding upon the Commissioner when interpreting
or applying the law to a taxpayer, provided that the taxpayer's facts and
circumstances are the same as those set forth in the ruling and any applicable
conditions or limitations in the ruling are satisfied.
SARS will be conducting workshops and training sessions with practitioners
and taxpayer organisations over the next two weeks to help familiarise people
with the new system.
Additional information may be sourced at atrinfo@sars.gov.za.
Enquiries:
Adrian Lackay
Cell: 083 388 2580
Issued by: South African Revenue Service
2 October 2006
Source: South African Revenue Service (http://www.sars.gov.za)
