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World just got smaller for cash hoarders and tax dodgers

05 April 2016   (0 Comments)
Posted by: Author: Linda Ensor
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Author: Linda Ensor (BDlive)

There are fewer places to hide for people illegally hoarding cash and avoiding taxes, a Treasury official said on Monday.

More than 11.5-million financial and legal records of secret offshore companies and individuals have been leaked to a global team of journalists. Those implicated in the now infamous scandal known as the Panama Papers include top politicians and businessmen.

The revelations follow last year’s disclosures that HSBC’s Swiss division had helped wealthy customers from more than 203 countries evade taxes on secret accounts. It was claimed that South Africans had R23bn in more than 2,200 accounts.

The South African Revenue Service (SARS) responded to the claims by giving those with illegal accounts a deadline to come clean or face penalties.

Treasury deputy director-general Ismail Momoniat said the Panama Papers demonstrated that the secret accounts held in the country would be revealed despite Panama resisting participation in the Organisation of Economic Co-operation and Development (OECD) agreement for the automatic exchange of information by tax authorities, which comes into force in the second half of 2017.

There was no guarantee that countries remaining outside the net of the agreement would be able to maintain the confidentiality of the financial information.

"This kind of information is going to come to the fore and we can expect much more," Mr Momoniat said.

More than 90 countries have committed to begin the automatic exchange of information between next year and 2018.

But Panama has said it was only prepared to exchange information on the basis of bilateral agreements, and only in response to specific requests for information, to ensure the protection of confidentiality. It proposed its own model but the OECD rejected this and has included Panama on the grey list alongside Bahrain, Nauru and Vanuatu, which have so far not announced whether they will adhere to the agreed model.

Ahead of the coming into force of this agreement, the Treasury has proposed a tax and foreign exchange amnesty for those with illegally-held offshore assets. This will allow people and companies to regularise their financial affairs before these are uncovered through the automatic exchange of information.

The draft law outlining how the amnesty will operate is due to be presented to Parliament’s standing committee on finance shortly.

SARS spokesman Sandile Memela said on Monday that they had taken note of reports concerning the Panama Papers and the level of tax avoidance worldwide.

SARS would "analyse the information to act in a responsible and appropriate manner" when the information became available.

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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.


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.

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