South African Revenue Service (SARS) commissioner Edward Kieswetter recently announced that the tax collector will focus on an estimated R400 billion stashed in accounts overseas.
Kieswetter said that South Africa has an automatic exchange of information protocol with about 160 countries – with actual data received from 87 countries.
“From those countries, we have become aware that we have around 1.38 million reportable records that we have received for the reporting period 2019.
“(These records) indicate to us that there is an amount of about R26.6 billion held in offshore accounts only from these 87 countries. That’s how we get to the amount of well over R400 billion – it’s a simple translation, depending on the exchange rate on the day.”
These comments should be a warning for South Africans who have assets overseas to get their affairs in order, says Reinert van Rensburg, specialist at Tax Consulting SA.
“Under the Automatic Exchange of Information (AEOI) agreement, which SARS signed up for in 2014, SARS now automatically receives all the information it needs regarding the foreign revenue streams of South African tax residents.
“This information includes the individual’s name, tax reference number, account number, account balance and the income generated from the account. It is the very access to this detailed information that has awakened SARS to the reality that R400 billion is currently held offshore by South African taxpayers,” he said.
What to expect
Van Rensburg said South African taxpayers should take note of the focused intent with which SARS is handling its affairs to broaden the tax base by collecting information from third parties worldwide.
He said that SARS is already implementing measures to gather information regarding all foreign dealings by requesting the information directly from the taxpayer.
This includes requesting taxpayers to:
- Advise why they did not declare their foreign assets;
- Provide details of any offshore Trust that they are a beneficiary of;
- Provide a detailed Statement of Assets and Liabilities to include foreign assets;
- Disclose all bank accounts; and
- Furnish a copy of your foreign residence certificate, emigration tax clearance and where applicable, EMP336.
Failure by the taxpayer to give the necessary information and reasons within 21 days is a criminal offence in terms of the Tax Administration Act, Van Rensburg said.
“We have already seen SARS conduct more regular audits in an effort to recover revenue from South Africans earning foreign income and/or holding foreign assets. We anticipate that this will be further ramped up now that SARS is able to gain more accurate information regarding the financial position of individuals.
“This should be a concern for every South African, whether you are living abroad or in the country.”