Government Connect Issue 14 (October 2023)

Charging of contingency fees

Tax practitioners’ fees for work they undertake on behalf of a client must be proportional to the nature and complexity of the task. In consultation with Recognised Controlling Bodies (RCBs), SARS has updated the criteria for the recognition of controlling bodies and the registration of tax practitioners. These criteria include rules on charging contingency fees. A contingency fee is a fee that a tax practitioner charges a taxpayer based on the percentage of a refund the taxpayer will receive or the percentage of a reduction of the taxpayer’s tax liability. To protect the interests of taxpayers and prevent revenue loss to fiscus, SARS wishes to clarify that:

  • The charging of a contingency fee for completing or correcting tax returns is not an acceptable form of remuneration for tax practitioners.
  • The charging of a contingency fee is acceptable
    • when there is a dispute between the taxpayer and SARS under Chapter 9 of the TA Act, and
    • when the taxpayer brings an application for SARS to review its decisions under section 9 of the TA Act.


  • Charging of contingency fees for submission of tax returns has been forbidden since 2013.
  • Charging of contingency fees is not allowed for correcting tax returns from 14 September 2023.

Where contingency fees are allowed, the tax practitioner must enter into a written agreement with his/her client. The agreement should contain sufficient information on:

  • The details of the tax practitioner and the taxpayer,
  • The outcome upon which the contingency fees are based and its percentage,
  • The consequences if the outcome is not achieved, and
  • When the contingency fees are charged.

The agreement should also contain a clause that gives:

  • The taxpayer client has the right to refer the agreement to the relevant RCB for review, and
  • The RCB has the authority to set aside any provision of the agreement or any fees claimable in terms of the agreement if the RCB finds such provision or fees unreasonable or unjust.

Media release: Constitutional Court rules on duty-free purchases

The Commissioner for the South African Revenue Service (SARS), Mr Edward Kieswetter, welcomes the decision of the Constitutional Court in the matter between Nu Africa Duty Free Shops (Pty) Ltd and Others and the Minister of Finance and Others. The case arose when the SARS Commissioner identified and reported abuse of the duty-free system in which certain diplomats purchased duty-free tobacco and alcohol in South Africa and sold these goods on the domestic market. Investigations into these activities estimated that the fiscus was losing about R100 million per month. In light of the ruling, the Minister of Finance announced a review of the treatment of duty-free shops, which includes a revision of the schedules made under the Customs and Excise Act and the VAT Act that regulate the duty-free retailers.

See the full media statement here.

SARS publishes PAYE monthly submission external BRS

SARS seeks to replace the current employees’ tax, provisional tax, and assessment filing seasons for Employers and non-business individuals with a modern, fully automated tax-assessment, withholding, and tax-payment system.

The first step in achieving this objective requires Employers to submit payroll data monthly from 1 March 2025.

The PAYE Monthly Submission External BRS defines the requirements Employers must adhere to for the monthly submissions.

Additional functionality for the SARS Online Query System (SOQS)

SARS has introduced additional functionality on SOQS. Queries can now be lodged for Large Business Institutions. This information can be found here:

Expansion of IT3 Third Party Data Reporting to include Income from Trusts and Donations Made

Through SARS eFiling, you can securely submit IT3 third party data to SARS.

Two additional third-party data submissions have been added:

  • IT3(t): income received from a Trust
  • IT3(d): declarations pertaining to Section 18A donations

The third-party data-reporting process requires Representative Taxpayers to report the required ITR12T information via the IT3-01 and IT3-02 forms. Representative Taxpayers can view and correct the data or certificates submitted to SARS on request.

SARS requests that Section 18A approved entities (e.g., Government Institutions, Public Benefit Organisations, or United Nations Agencies) that received donations and issued tax-deductible receipts to Donors, to report those receipts to SARS. If a receipt was issued, then it should be reported to SARS. SARS has updated the documents pertaining to these processes. We have also developed a new guide on how to manage the submission of IT3 third-party data:

Tax Directives system implemented

SARS has enhanced the Tax Directives system in line with the IBIR-006 Tax Directives Interface Specification Version 6.505. SARS thanks those who assisted with the Trade Testing for this solution. For more information, see the I want a Tax Directive webpage.

Customs refunds and drawbacks

Customs and Excise Refunds and Drawbacks have been automated. Apply for these through eFiling. For assistance, read the SC-DT-C-19 – Refunds and Drawbacks–External Guide.

Employer Interim Reconciliation Declarations (EMP501)

The following has been implemented for the PAYE Interim Filing Season:

  • No new source codes were added, but there are minor changes to certain field types and validations.
  • Enhancements to IRP5 certificates.
  • Enhancements to Employment Tax Repository.
  • EMP201 returns for suspended (s-coded) Employers: Employers will be prevented from submitting EMP 201 returns once the Employer’s status reflects as suspended. This will be effective for the period from the date of suspension. See the guide here: PAYE-AE-06-G07 – Guide for Validation Rules Applicable to Reconciliation Declarations 2024 – External Guide.
  • Enhancements to EMP501 Reconciliation.
  • Section 95 estimates.

Updated external guides:

SARS Payment Rules Guide

The SARS Payment Rules Guide has been updated to include African Bank and Bank Zero for electronic fund transfers (EFTs) to SARS’s public beneficiaries listed on the banking platform. With effect from 15 September 2023, Air Passenger Tax payments will be allowed only on eFiling. Access the guide here: GEN-PAYM-01-G01 – SARS Payment Rules – External Guide

VAT Connect Newsletter

The latest VAT Connect Newsletter is available here: VAT Connect Issue 16 (August 2023) | South African Revenue Service (

VAT-modernisation discussion paper published

SARS has published a discussion paper on VAT modernisation. This discussion paper sets out SARS’s vision to modernise South Africa’s VAT administrative framework.

The discussion paper invites businesses (vendors), accounting-system software developers or suppliers, technology entities, recognised controlling bodies, public-finance entities, municipal-finance entities, and the public to submit contributions and comments to help modernise the VAT administrative framework.

The discussion paper is available here: Discussion Paper on Value-Added Tax Modernisation.

Submit comments by close of business on 31 October 2023 to [email protected].

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