1. I am aware that the SARS application to court concerning a subpoena issued by the Public Protector compelling me to divulge taxpayer information has created a lot of speculation in the media and social media. Healthy debate is the basis for good democracy and the quality of the debate increases when it is informed by facts.
2. The SARS application to court is not about a specific taxpayer but SARS has turned to the court to clarify and determine an important legal principle that underscores a democratic principle founded on the relationship of trust between SARS and all taxpayers. This is a taxpayer’s right to privacy, which concerns the right to confidentiality of all information – personal and financial – held by the tax administration. Every single taxpayer in South Africa therefore has a direct vested interest in this matter on which we are seeking clarity, and no one can afford to be indifferent in this regard.
3. You could quite rightly ask why any organisation, or individual for that matter, would not welcome the obtaining of such clarity in a matter that clearly has such keen public interest and profound impact.
4. The constitutional principle of public access to information held by the state must be balanced against other constitutional principles, such as that of privacy, and other factors, such as the overriding risk of harm to a legitimate public or private interest. The interest of a taxpayer’s right to privacy, which concerns the right to confidentiality of personal information held by the tax administration, is generally recognized as outweighing the right to information and thus justifies confidentiality rules protecting privacy. Thus section 35 of the Promotion of Access to Information Act, 2000, provides mandatory protection for certain SARS records from third party requests.
5. Disclosure of tax information has consequences for the core business of any tax administration – the implementation and enforcement of tax legislation and regulation. The collection of taxes is clearly vital for any state financed by taxes and a tax administration’s primary responsibility is to collect the proper amount due to the government at the least possible cost to the public. The willingness of taxpayers to comply with the law depends greatly on the trust invested by citizens and businesses in the tax administration in question and in their confidence that their personal information will not be generally disclosed. Taxpayers should have their expectations confirmed that the tax authority administering the tax laws does so consistently and fairly so that similarly situated taxpayers are treated equally and consistently under the law. In the balancing of public interests, which may often be competing, the legislators clearly intended that taxpayer confidentiality is an overriding interest, unless otherwise expressed in law.
6. The Commissioner of SARS and all tax officials are legally compelled to uphold the confidentiality of taxpayers’ information, except under specific legal circumstances. The specific legal circumstances do not apply to the Public Protector.
7. The confidentiality provisions
7.1 In terms of the Tax Administration Act, 2011, (TAA) “taxpayer information” is subject to the confidentiality provisions which contained in Chapter 6 (sections 67 to 74) of the TAA.
7.2 The general rule is that all SARS officials must preserve the secrecy of “taxpayer information”. Section 69(1) of the TAA provides:
A person who is a current or former SARS official must preserve the secrecy of taxpayer information and may not disclose taxpayer information to a person who is not a SARS official.
7.3 There are, however specific provisions that allow “taxpayer information” to be disclosed to a person who is not a SARS official. These circumstances can be categorised into five categories:
- A SARS official can divulge taxpayer information in order to administer a Tax Act.
- In terms of a court order.
- If a taxpayer gives written consent.
- f another Act expressly overrides the TAA confidentiality provisions – in terms of section 69(2)(b) of the TAA.f another Act expressly overrides the TAA confidentiality provisions – in terms of section 69(2)(b) of the TAA.
- To certain persons and entities identified in the TAA – in terms of section 70 of the TAA
7.4 The following Acts contain provisions that expressly override the tax confidentiality provisions:
- Section 9 of the Drugs and Drug Trafficking Act, 1992
- Section 37 of the Financial Intelligence Centre Act, 2001; and
- Section 71 of the Prevention of Organised Crime Act, 1998.
The Public Protector Act, 1994, does not contain a provision that overrides the TAA’s confidentiality provisions.
7.5 Section 70 lists certain entities that SARS may provide information to but subsection 70(5) provides that such disclosure may be made only to the extent that it is necessary, relevant and proportionate to exercise a legislative function or duty. Further disclosure of taxpayer information by entities to whom SARS discloses under the provision is strictly regulated.
The Public Protector is not a person listed in section 70 of the TAA.
7.6 Even in the case of the parties permitted by law, SARS has to apply its mind to the purpose for which the information is being requested, how it will be used and how it will be protected.
7.7 The essence of this summary of the TAA is that the TAA does not allow SARS to provide “taxpayer information” to the Public Protector.
7.8 The breach of the TAA’s confidentiality provisions amounts to criminal offence in terms of section 236 of the TAA.
7.9 Equally a person who, without just cause refuses or fails to comply with a request for information by the Public Protector is guilty of a criminal offence under section 11(3) of the Public Protector Act, 1994.
8. In an attempt to avoid litigation, in 2018/19 officials from SARS and the Public Protector’s office briefed counsel jointly. The advice provided to SARS and the Public Protector, to my mind, clearly confirms that SARS cannot be compelled to provide taxpayer information to the Public Protector. Earlier this year I unequivocally expressed my support for the office of the Public Protector. In many other instances, I and my staff have worked diligently to extract information at the request of her office, and I shall continue to do so. I also expressed my wish that we would keep a line of communication open, where we could rather discuss issues of potential disagreement openly, honestly and frankly.
9. The subpoena issued upon me has taken me by surprise, as I believed that the goodwill expressed would be reciprocated in the interest of good governance and the constitutional duty between organs of state to cooperate with each other, to support each other and to respect each other’s functions and legal duties.
10. Taking this matter for judicial determination is certainly not my first choice. It would have been preferable for SARS and the Public Protector to have resolved this issue without resorting to a court. However, there is a fundamental issue of confidentiality of tax information at stake, which I am compelled to uphold for the benefit of all taxpayers. The principles are not limited to the taxpayers cited in the court documents. The principles affect every taxpayer and the efficient functioning of SARS. If at any stage either of the taxpayers consent to the release of their information, then SARS will respect that consent. Equally, if a court orders that SARS is required to release taxpayer information then I shall comply promptly with the order.
11. I view clarity on this matter as singularly important for democracy in South Africa and as a further building block in fulfilling my commitment to rebuild public trust and confidence in SARS. It is in this spirit that SARS’ application to court was made.
12. We are pleased with the outcome of the court decision today which essentially confirmed that parties will jointly engage with the court on the substantial matter whilst each retains their legal rights.
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