While the litigation has reignited debate about access to taxpayer information, the legal position remains clear: information provided to SARS enjoys extensive statutory protection. Although taxpayer confidentiality is not absolute, disclosure may occur only in limited circumstances where compelling public interest considerations justify access. Confidentiality remains the rule; disclosure remains the exception.
The starting point is the confidentiality regime established by the Tax Administration Act 28 of 2011 (“TAA”). Section 69(1) of the TAA provides that a current or former SARS official must preserve the secrecy of taxpayer information and may not disclose such information to any person who is not a SARS official, subject to limited exceptions. The term “taxpayer information” is broadly defined and includes information obtained by SARS in respect of a taxpayer or any other person in the exercise of its functions under tax legislation.
These provisions serve an important purpose within the South African tax system. Taxpayers are required to furnish SARS with significant amounts of personal, financial and commercial information. The law therefore seeks to ensure that such information remains confidential. In doing so, the confidentiality regime protects not only taxpayers’ privacy interests but also public confidence in the tax system and, ultimately, voluntary compliance with tax laws.
The importance of taxpayer confidentiality is further reinforced by section 14 of the Constitution, which guarantees the right to privacy. This constitutional protection underpins the confidentiality provisions contained in the TAA.
However, taxpayer confidentiality is not the only constitutional right at stake.
Section 32 of the Constitution provides that:
“Everyone has the right of access to –
(a) any information held by the state; and
(b) any information that another person holds and that is required for the exercise or protection of any rights.”
The Promotion of Access to Information Act 2 of 2000 (“PAIA”) was enacted to give effect to this constitutional right. PAIA establishes a framework through which individuals may request access to records held by public bodies and, in certain circumstances, private bodies.
The tension between taxpayer confidentiality and the constitutional right of access to information came before the Constitutional Court in Arena Holdings (Pty) Ltd t/a Financial Mail and Others v South African Revenue Service and Others (CCT 365/21) [2023] ZACC 13 (the “Arena Holdings” case).
Before the decision in Arena Holdings, the legislative framework effectively prevented access to taxpayer information held by SARS, even where compelling public interest considerations may have favoured disclosure. The applicants argued that this position was inconsistent with PAIA because it excluded taxpayer information from the operation of PAIA’s public interest override.
The Constitutional Court acknowledged that taxpayer confidentiality serves a legitimate and important public purpose. However, it held that taxpayer confidentiality cannot operate as an absolute bar to disclosure in every circumstance. The Court found that taxpayer information must be capable of consideration under section 46 of PAIA, which requires disclosure where the public interest in disclosure outweighs the harm that may result from releasing the information.
Following the judgment, amendments were made to the TAA to align the legislation with the Constitutional Court’s ruling and to permit disclosure of taxpayer information where access has been granted under section 46 of PAIA.
Importantly, the Constitutional Court did not create a general right of access to taxpayer information, nor did it suggest that taxpayer records should be routinely disclosed upon request. Rather, the Court confirmed that confidentiality remains the default position and that disclosure will be permitted only where constitutional and statutory requirements justify it.
PAIA sets a high threshold for disclosure. Section 46 requires a record to be disclosed where its contents would reveal evidence of a substantial contravention of, or failure to comply with, the law, or evidence of an imminent and serious public safety or environmental risk, and where the public interest in disclosure clearly outweighs the harm contemplated in the relevant exemption. The public interest override is therefore intended to apply only in exceptional circumstances.
For taxpayers, the key takeaway is reassuring. Information submitted to SARS continues to enjoy robust statutory protection under the TAA. The Constitutional Court’s decision in Arena Holdings did not diminish the fundamental principle of taxpayer confidentiality. Rather, it confirmed that confidentiality may, in rare and carefully circumscribed circumstances, yield to the constitutional right of access to information where the stringent requirements of PAIA have been satisfied.
Taxpayer confidentiality remains firmly entrenched in South African law. Disclosure is possible, but only in exceptional cases where a compelling public interest justifies it.
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