A critical discussion of the 'pay now argue later’ rule in South African tax law.

Abstract

The process of tax recovery is a significant and necessary one. However, it is also fraught with complexities and controversy. The State has enacted laws to facilitate the efficient collection of taxes. When it comes to the various stringent tax laws in the South African tax system aimed at ensuring the efficient collection of taxes, the ‘pay now, argue later’ rule is certainly a contender. The practical impact of the rule is that neither the noting of an objection nor an appeal suspends a taxpayer’s pre-existing obligation to pay tax. The provisions of the Tax Administration Act 28 of 2011 contain wide powers that are conferred upon the South African Revenue Service (SARS). These provisions in conjunction with the rule are the catalysts through which taxpayers’ co-operation with SARS is achieved. It is therefore not surprising that the State may enact and execute its laws in a manner so as to effectively achieve its tax collection mandate, whilst not having sufficient regard to the rights of taxpayers. The purpose of this mini dissertation is to engage in a critical discussion of the ‘pay now, argue later’ rule and to show the need to ameliorate the effect of the powers bestowed upon SARS in order to ensure better protection of taxpayers’ rights. There is a need to create better awareness of taxpayers’ rights and for tax legislation to be a lot more understandable and unambiguous in the interest of creating certainty for taxpayers, SARS and the courts.