Analysis: The development of the South African office of the Tax Ombud: From 2013 to 2020 and beyond

• Jurisdiction: South Africa
• Date: 19 January 2021
• Citation: (2020) 32 SA Merc LJ 113
• Pages: 113-128
• Published date: 19 January 2021
• Author: Legwaila, T.

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THE DEVELOPMENT OF THE SOUTH

AFRICAN OFFICE OF THE TAX OMBUD:

FROM 2013 TO 2020 AND BEYOND

THABO LEGWAILA

Professor of Mercantile Law, University of Johannesburg

I INTRODUCTION

The Off‌ice of South Africa’s Tax Ombud (OTO) was created by the

Minister of Finance through the appointment of the Tax Ombud in

terms of section 14 read with section 259 of the Tax Administration Act

28 of 2011 (‘TAA’) in 2013. The mandate of the off‌ice is to review and

address complaints by taxpayers regarding a service matter or proce-

dural or administrative matter against the South African Revenue

Service (SARS) arising from the application of the provisions of a tax Act

by SARS. The OTO was explicitly intended to provide taxpayers with a

speedy and low-cost process to resolve administrative diff‌iculties that

cannot be resolved by SARS (National Treasury, Budget Review (2012)

59). Effectively, the OTO is responsible for reviewing and providing

easily available remedies to taxpayers where taxpayers have been

aggrieved by SARS’s service, procedural or administrative processes.

This would ensure commitment to governance (accountability) by tax

off‌icials engaged in the implementation of tax laws and address the

maladministration of such laws (see Letete, ‘An Analytical Examination

of the Legal Framework Creating the Tax Ombudsman: Any Hope for

South African Taxpayers?’ (2013) 3(4) International Journal of Public

Law and Policy 444).

Legislative provisions creating and governing the OTO (ss 15–21 of

the TAA) were not amended after their enactment in 2012 until 2017

with the enactment of the Tax Administration Amendment Act 16 of

2016 (‘the Amendment Act’), which came into effect on 19 January

2017. This note analyses the changes made by this Act to the off‌ice of the

OTO and the effect that those changes have on the OTO’s powers to

protect taxpayers and afford taxpayers a process to address service

matters or procedural or administrative matters, as envisaged at the

inception of the OTO. In so doing, this note explores the nature of the

OTO, the original structure, the mandate and powers of the OTO, and

the rationale behind the changes and the impact of the changes. This

note further highlights the nature, characteristics and powers of the

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OTO’s counterparts in select countries where the OTO’s counterparts

are bestowed more powers than the South African OTO. A brief outline

of alternative constitutional and administrative law recourse available

for taxpayers is also provided.

II THE HISTORICAL DEVELOPMENT OF THE TAX

OMBUDSMAN

The word ‘ombudsman’ is a Swedish word meaning ‘representative’. Its

roots can be traced back to the Ombudsman for Justice which was

established in Sweden in 1809. The history of the off‌ice of the ombuds-

man around the world could be described as a combination of three

interrelated developments: proliferation (as regards numbers), diversif‌i-

cation (as regards categories and types), and mutation and variation (as

regards functions and purpose) (Gregory, ‘The Ombudsman Observed’

(1997) 1 The International Ombudsman Yearbook 78). As a result, since

1809 many countries have adopted the concept of the ombudsman, such

that by 2006 the ombudsman existed in 125 countries around the world,

some at national and others at sub national levels (Serrano, ‘The

Taxpayer’s Rights and the Role of the Tax Ombudsman: An Analysis

from a Spanish and Comparative Law Perspective’ (2007) 35(5) Intertax

331–340).

In the recent past, many countries have created an off‌ice of the tax

ombudsman to specif‌ically focus on service, procedural and administra-

tive matters between the tax authorities and the taxpayers in an

extrajudicial setting. This is generally in light of the recognition of the

importance of taxpayer rights and protection in relation to the collection

of taxes by tax authorities, and due to the uniqueness of the relationship

between the taxpayer and the tax authorities. An essential element of this

relationship is that tax authorities are vested with overarching powers to

collect taxes, even where the taxpayer intends to challenge the correct-

ness or validity of the assessment, and monopoly service providers to the

community in which taxpayers do not have a direct say about the

application of the taxes that these authorities collect from them

(Noroozi, ‘The Role of the Inspector General of Tax of Australia’ (2016)

Australian Government: Inspector-General of Taxation 1 available at

https://taxpayerrightsconference.com/wp-content/uploads/2015/11/

Noroozi_Final_Paper.pdf, accessed on 27 January 2020).

With further development of tax laws, resulting in the consequential

complexities in the relationships between tax authorities and taxpayers,

some f‌iscal jurisdictions have accorded greater powers to their ombuds-

men than was previously the case. The most widely adopted models in

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