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On 30 May 2023, the Constitutional Court of South Africa handed down judgment in the case of Arena Holdings (Pty) Ltd t/a Financial Mail v South African Revenue Services (SARS) regarding access to taxpayer information. The case was significant in that it involved a constitutional challenge to sections of the Tax Administration Act (TAA) and the Promotion of Access to Information Act (PAIA). The court’s ruling has far-reaching implications for the balance between the right to privacy and the public’s right to access information.

Arena Holdings (Pty) Ltd, AmaBhungane Centre for Investigative Journalism NPC, and Warren Thompson, a financial journalist, brought the application before the highest court in the land. They sought access to former President Jacob Zuma’s tax records, based on allegations of non-compliance found in a book titled “The President’s Keepers” and various other sources. SARS refused the application, citing taxpayer confidentiality provisions in PAIA and the TAA. The applicants challenged the constitutional validity of the statutory prohibition of the disclosure of a taxpayer’s information held by SARS, in circumstances where such disclosure would reveal evidence of a substantial contravention of the law and would be in the public interest.

It all started when the High Court declared sections 35 and 46 of PAIA unconstitutional and invalid to the extent that they prevented access to tax records by a person other than the taxpayer, even when the requirements of PAIA were met. The court found that the limitations on access to information were not justified and that the public interest in accessing taxpayer information could override taxpayer confidentiality. The High Court ordered the release of Mr. Zuma’s tax records and referred the matter to the Constitutional Court in terms of Section 172(2)(a) of the Constitution to confirm the orders of constitutional invalidity.

The applicants accordingly approached this Court to confirm the declaration of invalidity made by the High Court. The applicants argued that there is an absolute prohibition on disclosing taxpayer information held by SARS to anyone other than the taxpayer themselves. They claimed that these prohibitions prevent the media from obtaining tax information and reporting on it, even if the information reveals corruption or other unlawful activities. The applicants contended that these provisions are unconstitutional as they limit the right of access to information and freedom of expression. They argued that the limitations imposed are not justified and are unnecessary for protecting taxpayer privacy or compliance.

SARS argued that the tax administration and access to information regime established under TAA and PAIA strike a fair and reasonable balance between the right to privacy and the right to access to information. SARS emphasized that taxpayers are required to disclose personal information and even their own criminal conduct to SARS. They contended that the impugned provisions serve to preserve taxpayers’ confidentiality and that expanding the override provision would undermine taxpayers’ trust in SARS. SARS maintained that the limitations on access to tax information are not absolute but subject to specific exceptions.

The Minister of Justice acknowledged the relevance of the right of access to information but argued that it is not absolute and should be subject to limitations outlined in the Constitution. The Minister emphasised the public interest in maintaining the confidentiality of taxpayer information and questioned the proposed extended “public-interest override” as speculative and discriminatory.

Similarly, the Minister of Finance supported the confidentiality regime created by the TAA, asserting that it strikes a fair balance between taxpayer privacy, tax collection efficiency, and international obligations. The Minister argued that public policy considerations, effective tax administration, and voluntary compliance policy require maintaining the confidentiality of taxpayer information. They also raised concerns about the broadness of the proposed “public-interest override” and the loss of control over released tax information.

The Regulator, while not actively participating in the proceedings, expressed the view that any law prohibiting the disclosure of records without reasonable and justifiable limitations or grounds for refusal of access under PAIA would be inconsistent with the objectives of PAIA. They argued that SARS has an absolute right to refuse access to records under Section 35 of PAIA, contrary to the factors allowing limitations on access to information.

The Constitutional Court’s majority decision upheld the High Court’s ruling, declaring sections 35 and 46 of PAIA, as well as sections 67 and 69 of the TAA, as unconstitutional and invalid. These sections prevented anyone other than the taxpayer from accessing tax records, even if they met the requirements stated in subsections 46(a) and (b) of PAIA. The majority held that the complete prohibition on access to taxpayer records did not meet constitutional standards.

A dissenting judgment, penned by Justice Mhlantla (with Justices Madlanga, Mbatha, and Tshiqi concurring), expressed disagreement with the majority decision of the Constitutional Court. The minority argued against constitutional invalidity and maintained that the limitation on access and disclosure of taxpayer information, except by the taxpayer concerned, was justified. They believed that the current framework of the TAA already struck a balance between access to taxpayer information and maintaining taxpayer confidentiality.

However, the majority recognised the need to strike a balance between these rights and concluded that the current framework of the TAA did not provide an adequate balance. They concluded that the prohibition on disclosure of taxpayer information in section 35(1) of PAIA was reinforced by provisions in the TAA and was absolute. The declaration of invalidity was suspended for 24 months, giving Parliament time to address the constitutional concerns. The majority ordered certain provisions to be included and referred the request for former President Zuma’s tax records back to the South African Revenue Service (SARS) for reconsideration.

In this judgment, the Constitutional Court emphasised the importance of the rights to privacy, access to information, and freedom of expression. This represents a significant development in striking a balance between privacy and access to information. The ruling recognises the public interest in accessing taxpayer information under specific conditions and expands the application of the “public-interest override” provision. This verdict has far-reaching implications for investigative journalism and the public’s right to transparency and accountability.