Legal Uncertainty in the South African VAT

in Chris Evans, Riël Franzsen and Elizabeth (Lilla) Stack (eds), Tax Simplification: An African Perspective (Pretoria: Pretoria University Law Press, 2019), pp. 160-177

22 Pages Posted: 12 Dec 2019

See all articles by Marius van Oordt

Marius van Oordt

African Tax Institute

Richard Krever

University of Western Australia Law School

Date Written: November 1, 2019

Abstract

A significant cause of compliance costs for taxpayers is legal uncertainty resulting from ambiguity in the law and indistinct borders between differing tax rules. The self-assessment principles found in most modern tax systems require taxpayers to interpret the law, with the risk of penalties if their interpretation proves incorrect. The costs of establishing a correct interpretation may be significant. This paper reports the findings of a study undertaken to find the main areas of uncertainty in the South African value-added tax (VAT) law as indicated by queries by tax advisers and tax disputes elevated to the courts. Five areas of VAT law were found to be primary sources of uncertainty. In some instances, uncertainty is attributable to structural features of the law. Legislative amendment may be required to address the problem in these instances. Other sources of uncertainty include taxpayer ignorance or poor guidance by tax authorities. Administrative measures to clarify the operation of the law may be sufficient to reduce uncertainty and consequently compliance costs in these cases.

Suggested Citation

van Oordt, Marius and Krever, Richard, Legal Uncertainty in the South African VAT (November 1, 2019). in Chris Evans, Riël Franzsen and Elizabeth (Lilla) Stack (eds), Tax Simplification: An African Perspective (Pretoria: Pretoria University Law Press, 2019), pp. 160-177, Available at SSRN: https://ssrn.com/abstract=3493442

Marius Van Oordt

African Tax Institute ( email )

Physical Address Economic and Management Sciences
Pretoria, Gauteng 0002
South Africa

Richard Krever (Contact Author)

University of Western Australia Law School ( email )

M253
35 Stirling Highway
Crawley, Western Australia 6009
Australia

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