This content is from: South Africa

South Africa: Pay now, argue later

Peter Dachs
The Tax Administration Act provides that a taxpayer is liable to pay tax once an assessment has been raised by the South African Revenue Service (SARS). In terms of section 164 of the Tax Administration Act, unless a senior SARS official otherwise directs in terms of subsection (3), the obligation to pay tax and the right of SARS to receive and recover tax will not be suspended by an objection or appeal or pending the decision of a court of law.

In terms of section 164(2) a taxpayer may request a senior SARS official to suspend the payment of tax or a portion thereof due under an assessment if the taxpayer intends to dispute or disputes the liability to pay that tax.

Section 164(3) provides that a senior SARS official may suspend the payment of the disputed tax or a portion thereof having regard to:

  • The compliance history of the taxpayer;
  • The amount of tax involved;
  • The risk of dissipation of assets by the taxpayer concerned during the period of suspension;
  • Whether the taxpayer is able to provide adequate security for the payment of the amount involved;
  • Whether the payment of the amount involved would result in irreparable financial hardship to the taxpayer;
  • Whether sequestration or liquidation proceedings are imminent;
  • Whether fraud is involved in the origin of the dispute; or
  • Whether the taxpayer has failed to furnish information requested under the Tax Administration Act for purposes of a decision under section 164.

Section 164(6) states that from the date that SARS receives a request for suspension and ending 10 business days after notice of SARS' decision, no recovery proceedings may be taken against the taxpayer unless SARS has a reasonable belief that there is a risk of dissipation of assets by the taxpayer.

Therefore, as soon as a taxpayer receives an assessment from SARS which it intends to challenge, it should consider making application for a suspension of payment under section 164(2) of the Tax Administration Act.

The taxpayer should refer to and argue its case in terms of each of the grounds set out in section 164(3). The test is a composite one and therefore it is not necessary for a taxpayer to pass each of these tests.

If SARS decides not to grant the request for suspension of payment, a taxpayer cannot object and appeal against such decision. However, the exercise of the power granted to SARS to approve or refuse a request for a suspension of payment constitutes administrative action and is therefore reviewable by a court in terms of the principles of administrative law.

Peter Dachs (
ENSafrica – Taxand
Tel: +27 21 410 2500

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