Record retention and general compliance
Recently, the South African Revenue Service (SARS) officials have been auditing the tax accounts of taxpayers with respect of record retention and general tax compliance.
One compliance requirement they are focusing on relates to the retention of records required under the Tax Act. In terms of the Tax Administration Act (TAA), a taxpayer is required to have its records available for inspection by a SARS official in South Africa as and when requested.
This requirement can be particularly difficult for a non-resident or electronic services VAT vendor whose records are housed outside of South Africa. With SARS’s prior approval, however, a taxpayer’s records can be housed outside of South Africa. To request such approval, a taxpayer must submit a ruling application under the terms of the TAA. Based on that application, SARS will confirm whether the taxpayer may, in fact, store its electronic records outside South Africa.
Obtaining such a ruling from SARS is a statutory requirement and, as such, it is necessary. We recommend that taxpayers interested in such approval seek the help of tax consultants who are familiar with the process.