16 MAY 2002

The article published in the Moneyweb Internet site contains several factual misstatements, and if unchallenged, may have the effect of bringing the South African tax system to disrepute.

It is a gross misstatement that SARS applied the "pay now argue later" rule in respect of an amount of R2, 6 billion.

The "pay now and argue later" rule was only applied to an amount of about R16 million, which amount was based not on "press reports" as suggested in the article. This was based on a concession by the taxpayer himself that an amount of more than R10 million could be added to his gross income. He tendered to pay tax thereon. The taxpayer, however, failed to do so despite demands.

The remainder of Mr King's assessment (the total of which is not R2, 6 billion as reported on Moneyweb) has been deferred until the finalisation of the due process.

The taxpayer sought relief through an interdict against SARS. The High Court dismissed Mr. King's application for an interdict against SARS on the grounds that his different versions on different occasions indicated that there was not a remote probability that he would not eventually be held liable to pay the full amount of about R16 million by the Income Tax Court.

The application of the "pay now argue later" rule was approved by the High Court following a previous ruling by the Constitutional Court (Metcash case) that the rule is in line with the letter and spirit of the South African constitution and that it can be applied in suitable cases.

In the interest of a fair and balanced debate on Mr. Kings' claims that the tax system is unfair and/or that the Income Tax Act has been applied unfairly in his case, SARS challenges Mr. King to grant permission to the media to have access to the Court files and the judgement of the High Court. Furthermore, SARS challenges Mr. King to relinquish his rights in terms of sections 4 of the Income Tax Act thereby allowing SARS to make a full disclosure on the matter.

SARS does not take away passports from taxpayers. This was done by the National Prosecution authority pending the forthcoming criminal prosecution.

SARS applies the "pay now and argue later" rule with circumspection. Bona fide taxpayers have nothing to fear. It is the interest of taxpayers who punctually pay their taxes that the rule should be applied in those cases where it is necessary to do so. History has shown that if we all pay our fair share, then we all pay less.

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