Will SARS publish Zuma’s tax records?
The allegations (some prefer “revelations”) of tax impropriety against President Zuma made in Jacques Pauw’s book, The President’s Keepers, make me think of the equality clause in section 9 of the Constitution, as well as the provision of Tax statutes in South Africa. I am reminded of the pre-election public debate between Nelson Mandela and F.W. De Klerk on 14 April 1994. Mandela insisted that because tax is charged in terms of legislation and because the country’s supreme legislation makes provision for equality before the law, the president of the country must account for and pay tax on his income, resources, and perks.
Pauw alleges that President Zuma remained in gainful private employment (in gross and probably impeachable violation of the Constitution) with a security company for several months after he became president, and drew a monthly salary of R1 million. Pauw also alleges that Zuma failed and/or refused to file his tax return for several years after being appointed president, and that he has no accounted for the fringe benefits derived from the upgrades to Nkandla.
The surfacing of these allegations places SARS’s reputation under question. The Tax Administration Act No. 28 of 2011 draws and emphasises the distinction between SARS confidential information (Section 67[a]) and taxpayer information (Section 67[b]). This distinction establishes who is responsible for maintaining confidentiality with regards to specific information.
SARS confidential information is information that is relevant to the Administration of the tax act, i.e. information such as internal policies, legal opinions and Memorandums. It relates to information relevant to tax administration.
Taxpayer information, on the other hand, includes all material provided by a taxpayer or obtained by SARS in respect of a taxpayer, and specifically includes biometric information. Taxpayer information, unlike SARS confidential information is generously interpreted and has a wider application.
In respect of SARS confidential information, section 68(2) of the TAA provides that a SARS official (both current and former) may not disclose SARS confidential information to a person who is not a SARS official or to a SARS official who is not authorised to have access to that information. In addition, a SARS official must prevent these two categories of persons from obtaining access to SARS confidential information.
The exception to non-disclosure of SARS confidential information is to be found in section 68(3) of the TAA, which provides that a SARS official (both current and former) may disclose SARS confidential information if the information is:
- public information;
- authorised by the commissioner;
- authorised by the Act as an exception to the Chapter 6 provisions;
- granted disclosure in terms of PAIA; or
- by court order.
In respect of taxpayer information, SARS officials have stringent obligations to preserve the secrecy of taxpayer information unless and/or except:
- in terms of section 69(2)(d) of the TAA if such information is public information; and
- in terms section 69(6), read with section 69(1) of the TAA if such disclosure is made to the taxpayer or to another person with the written consent of the taxpayer.
Amid the allegations against Zuma, some people have suggested that there is solace to be found in section 67(5) of the Tax Administration Act No. 28 of 2011, which provides that:
“The commissioner may, for purposes of protecting the integrity and reputation of SARS as an organisation and after giving the taxpayer at least 24 hours’ notice, disclose taxpayer information to the extent necessary to counter or rebut false allegations or information disclosed by the taxpayer, the taxpayer’s duly authorised representative or other person acting under the instructions of the taxpayer and published in the media in the media or any other manner”
A closer scrutiny of this section reveals that the Commissioner may disclose taxpayer information to the extent necessary to counter or rebut allegations published in the media or any other manner. This is not a light decision or course of action. Weighing heavily on the decision to disclose must be whether the integrity of SARS is seriously under question. In this case, the SARS Commissioner must ask whether or not failure to account for the president’s tax is a matter that damages SARS’s integrity.