Print Page   |   Report Abuse
News & Press: Opinion

South Africa leading the pack towards global information exchange

31 July 2014   (0 Comments)
Posted by: Author: Webber Wentzel
Share |

Author: Webber Wentzel

South Africa leading the pack towards global information exchange 

On 9 June 2014, the South African Revenue Service (SARS) announced that South Africa and the United States (US) had entered into an inter-governmental agreement (IGA) which facilitates the implementation of the US Foreign Account Tax Compliance Act (FATCA), and signifies an important step in South Africa's journey in a global movement towards the automatic exchange of information for tax purposes. The so-called "Model 1A" agreement has not yet been ratified by Parliament. However, Public Notices confirming its implementation have been gazetted.

The IGA alleviates the need for South African financial institutions (FFI's) to enter directly into an agreement with the US Internal Revenue Service (IRS) and allows them to be generally compliant with FATCA simply by reporting to SARS. The Model 1A agreement is a reciprocal agreement, meaning that all information regarding US account holders, reported by the FFI's to SARS, will be relayed to the IRS by means of automatic data exchange, and reciprocally, SARS will be provided with similar information in relation to South African taxpayers in the US. FFI's will be required to obtain information on their present and future US account holders from 1 July 2014. Reporting will be done annually and thus FFI's have until June 2015 to submit all required information to SARS.

Further, in accordance with the Organisation for Economic Co-operation and Development (OECD) and G20 reporting model, SARS has also proposed a business requirement specification, which will cater for the automatic periodical reporting of specified information by financial institutions on all account holders, and not just US account holders as with FATCA. Once reporting has taken place, SARS will be able to automatically share the relevant information with its treaty partners, with respect to foreign account holders, on a reciprocal basis in terms of the existing bilateral double taxation agreements and the eight existing bilateral Tax Information Exchange Agreements (TIES) in place. A further 19 TIES are in the process of negotiation or ratification. South Africa's recent move to join the OECD's Convention on Mutual Administrative Assistance in Tax Matters further extends the range of countries with which SARS may exchange information. Over 70 territories are covered by the Convention on Mutual Administrative Assistance in Tax Matters. All of South Africa's Double Tax Agreements (nearly 90 of them) also contain provision for some sort of exchange of information and mutual assistance in tax collection.

It is clear that globally, through the use of automatic data exchange, regulators are targeting international tax evasion. SARS has encouraged the use of the voluntary disclosure programme under the Tax Administration Act, 28 of 2011, for the reporting of any undeclared offshore income.

This article first appeared on webberwentzel.com.



WHY REGISTER WITH SAIT?

Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.

MINIMUM REQUIREMENTS TO REGISTER

The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

Membership Management Software Powered by YourMembership  ::  Legal