Advance Tax Rulings

General

SARS published a discussion paper in 2003 on a proposal to introduce a system of advance tax rulings, in line with best practice elsewhere in the world. Research had shown three models to be in use:

• a non-statutory approach, in terms of which the tax authorities provide rulings on request and consider themselves bound by these;
• a statutory approach, in terms of which the authorities issue rulings on how the tax laws apply to a particular arrangement or transaction;
• a variation of the statutory model, where an independent authority issues binding rulings in response to requests by taxpayers or the tax authorities.

The selected model for South Africa was one with a statutory basis. This has come to fruition with the recent insertion into the Income Tax Act, 1962 ("the Act") of Part 1A, consisting of sections 76B to 76S. Part 1A will also apply to the fiscal Acts governing transfer duty, stamp duty, value-added tax and uncertificated securities