My PhD journey felt like a full circle of life! In 2000, I began a two-year contract with SARS in the VAT department. During my tenure at SAICA, I also had the privilege of project managing the SAICA VAT Sub-committee, which reports to the National Tax Committee.
Muneer Hassan CA(SA) Tax Consultant, Senior Lecturer in Taxation at UJ and Lecturer on the Gauteng Board Course
During my early stages of lecturing VAT to the Postgraduate Diploma in Accounting students at the University of Johannesburg (UJ), I found it extremely difficult to lecture from the VAT Act due to the lack of a coherent structure: for example in many cases the sections applicable to a single event are scattered throughout the Act. Thus, the full extent of the problem did not become apparent until I began teaching VAT. My dissertation abstract is presented next.
The purpose of the study was to explore the research issue at hand, namely that the current South African Value-Added Tax (VAT) Act is legally complex and is therefore complex to teach, apply in practice and administer. The research focus was on the incoherent structure of the VAT Act as an element of legal complexity. The study investigated legal complexities in the VAT Act, including language (plain English, sentence length and active voice: in other words readability and logical structure) and content of the law (ambiguity, exemptions, rebates and concessions, and annual amendments).
A qualitative research methodology was employed, and the research design included two phases: a literature review followed by semi-structured interviews. Existing empirical studies on legal complexities were analysed in the literature review. Studies analysed confirmed that the poor structure, layout and organisation of the VAT Act contribute to its complexity. Research confirms that improvements to structure, layout and organisation enhance the readability of statutes.
The interviews solicited the opinions of those impacted by the research problem regarding potential legal simplifications of the VAT Act. Interviewees agreed that all elements of legal complexity contribute to the complexity of the VAT Act. Interviewees further commented that the complexity of the VAT Act raises compliance costs. The results of the literature review and interviews contributed to the development of a framework for a simpler South African VAT Act, which is the contribution of this study. Guidelines that informed the framework include grouping sections together, introducing headings and subheadings, adhering to a VAT vendor’s lifecycle, employing international benchmarks, and seeking a solution that addresses local challenges most effectively. As a solution to the research problem, the framework was utilised to develop an index.
A recommendation that stands out in the framework is to completely rewrite the VAT Act. As a first step in this rewrite project, it is recommended that the designed index be further developed and incorporated into the VAT Act. This is the initial step towards the simplification of the Act.
In brief
I thank the various stakeholder organisations for granting me permission to conduct interviews with their staff and committee members, including academic institutions, SAICA, the South African Institute of Taxation, SARS and National Treasury (NT).
Taxes and death are certainties! However, nobody ever said that taxes ought to be complicated. I have extended an invitation to SARS and NT to discuss my research findings. It is hoped that SARS and NT will hear the call and take on this project. Simplicity will reduce compliance costs, as one interviewee mentioned, ‘that’s in the state’s interest … and it’s in the interest of all taxpayers not having to pay a lot of penalties and interest for getting it wrong.’
The dissertation is available on UJ’s website: Home » Research » Research Publications » Theses and Dissertations. Website: https://ujcontent.uj.ac.za/esploro/.
