Pretoria, Thursday 26 March 2020 – On 23 March 2020, the North Gauteng High Court handed down judgment in favour of the Commissioner in the matter between the Commissioner of SARS v The Public Protector and three others under case number 84074/19, which confirms that taxpayer information is confidential.

The Public Protector who, in the course of conducting an investigation, is empowered to subpoena any person for information in terms of section 11(3) of the Public Protector Act, 1994 had subpoenaed the Commissioner to provide taxpayer information in relation to such an investigation.

In terms of the Public Protector Act, 1994, a person is compelled to comply with a subpoena issued by the Public Protector unless there is “just cause” not to comply. The Commissioner therefore sought a declaratory order from the Court to clarify whether the Commissioner had “just cause” to decline to provide the Public Protector with taxpayer information because the Tax Administration Act, 2011 (TAA) does not allow disclosure.

The TAA prohibits SARS from releasing taxpayer information unless the disclosure falls within an exception to the general rule that safeguards taxpayer information expressly provided for in the TAA. The TAA, however, does not authorise SARS to release taxpayer information to the Public Protector, as an exception. In fact, releasing such information would be a breach of the confidentiality provisions, which is a criminal offence in terms of the TAA.

The Court ruled that:

“1.     It is hereby declared that a South African Revenue Service Official is permitted and is required under the provisions of “just cause” contained in section 11(3) of the Public Protector Act … read with section 61(1) of the Tax Administration Act … to withhold taxpayer information as defined in section 67(1)(a) of the Tax Administration Act…

2.     … the Public Protector’s subpoena powers do not extend to the taxpayer information”

Commissioner Kieswetter welcomes the judgement as it confirms that the Public Protector’s powers derived from the Public Protector Act do not claim superiority over the confidential status of taxpayer information prescribed in the TAA. He also points out that whilst this case may attract attention because it involves a prominent person, the underlying principle of confidentiality applies to every taxpayer equally and the entire tax base stands to benefit from this authoritative pronouncement.

Although the judgment relates to the Public Protector’s subpoena powers, most importantly, it confirms a number of fundamental principles of the confidentiality of taxpayer information says Commissioner Kieswetter.

First: Taxpayer information is sacrosanct. Since his appointment at SARS, Commissioner Kieswetter has continuously reiterated that SARS’ guarantee of confidentiality is what the taxpayer gets in return for the compulsion to provide open and full information to SARS. Without the statutory guarantee of confidentiality, the expectation that the taxpayer will be candid and accurate with SARS diminishes. It is the very foundation of the tax system in South Africa and generally tax systems worldwide, without which any tax administration cannot properly function

Secondly, every SARS official is legally required to treat taxpayer information with the utmost confidentiality and not to disclose it. Releasing such information would be a breach of the confidentiality provisions, which is a criminal offence in terms of the TAA. Every SARS official takes an oath or makes a solemn declaration to comply with the statutory confidentiality provisions. SARS officials adhere to their oath stringently and must continue to do so obsessively if we expect taxpayers to trust SARS. Commissioner Kieswetter has committed SARS to continuously strengthening its information security culture, systems, processes and procedures – even more so as SARS journeys towards becoming a digitalised revenue agency.    

Commissioner Kieswetter noted that the personal costs order against the Public Protector is a stark reminder to all SARS officials that each one of them represents the Government and has a profound duty to act with considerable care. SARS’ use of administrative power must always be fair, reasoned and, when necessary, firm and resolute.