Executives see tax system encouraging compliance

SA tax regulations encourage compliance says Grant Thornton. Image: Grant Cochrane Free Digital Photos

The same survey showed that 64% of the participants would welcome more global co-operation and guidance from tax authorities on what was acceptable and unacceptable tax planning‚ even if this provided less opportunity to reduce tax liabilities across borders.

The survey was conducted between November and December last year‚ and 3‚500 chief executives, managing directors and chairmen were interviewed globally.

Grant Thornton tax service partner AJ Jansen van Nieuwenhuizen said the survey also highlighted the fact that 72% of South African executives believed that the current tax arrangements did not bring enough economic participation into the tax base. The survey further revealed that 48% of executives stated that tax policies in the country were not geared to stimulate economic growth.

"National Treasury needs to do more to expand our tax base and then possibly loosen the ties currently constraining our golden geese‚" he said‚ with reference to the small number of taxpayers carrying a large tax burden.

High on OECD agenda

The issue of guidance and co-operation has been high on the agenda of the Organisation for Economic Co-operation and Development (OECD) for many years and led to the establishment of the Forum on Tax Administration in 2002.

More than 40 OECD and non-OECD members‚ including South Africa‚ participated in the forum in an effort to address the changing tax world and to enhance the relationship between taxpayers‚ their advisers and tax administrations. The pillars of the enhanced relationship include openness‚ impartiality‚ commercial awareness‚ responsiveness‚ disclosure and transparency.

However‚ greater certainty around dealings with transfer pricing and the government's anti-avoidance measures remained high on the global agenda‚ despite efforts to give guidance.

Jansen van Nieuwenhuizen acknowledged the efforts to establish greater transparency and clarity‚ and referred to the OECD's mandate to address base erosion and profit shifting through tax reforms. "We will hopefully start seeing benefits both locally and internationally‚ which will no doubt facilitate growth and an improved global tax planning environment‚" he said.

Meanwhile, the African Tax Administration Forum (ATAF) also recently held its own consultative conference in South Africa on new tax rules to address base erosion facing South Africa and other African countries.

A technical team‚ consisting of six or seven countries‚ will shortly be established to look at how Africa could contribute to co-ordinated action to strengthen international tax standards and the reform of the current international tax system‚ the forum's executive secretary‚ Logan Wort‚ said.