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All tax dodge reports probed, says Gordhan

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

Finance Minister Pravin Gordhan on Tuesday joined other world leaders in welcoming the revelations contained in the Panama Papers leaks about the offshore bank accounts held by thousands of taxpayers, including South Africans.

He said the information provided the basis for the authorities to act against those who illegally moved funds out of SA, and he gave the assurance that such reports were always investigated by the relevant agencies such as the South African Revenue Service (SARS), the Financial Intelligence Centre and the South African Reserve Bank.

"The world is systemically narrowing the scope for those who want to hide their offshore assets and avoid paying their taxes due to the South African fiscus," he said.

Earlier in the day Mr Gordhan announced that by the middle of last month SARS had collected R6.3bn under the special voluntary disclosure programme that was launched in 2012. Together with the R2.9bn in levies raised by the 2003 tax amnesty, this brings to R9.2bn the amount that the tax authority has collected through the special dispensations it has introduced to encourage noncompliant taxpayers to declare their hidden assets and income.

Mr Gordhan said in a written reply to a parliamentary question by Economic Freedom Fighters MP Floyd Shivambu that 8,401 taxpayers had lodged applications under the voluntary disclosure programme. This programme allows taxpayers to disclose undeclared income in exchange for lower penalties than would normally apply. Of the approved applications, 35% related to income tax, 13% to pay as you earn, 49% to value-added tax and 3% to other taxes.

More than 42,000 applications were approved under the 2003 tax amnesty, in which R48bn in illegally held offshore funds was declared.

Tax experts believe that substantial amounts of illegally held offshore funds were not declared in that amnesty and expect far more to come to light under the new tax and foreign exchange control disclosure programme that Mr Gordhan announced in his budget vote.

The new six-month programme, which was proposed by the Davis Tax Committee and which tax experts say is generous, is due to start in October. Draft legislation providing for the amnesty is due to be tabled in Parliament shortly.

Another indication of the large sums held illegally offshore was the disclosure last year that HSBC had assisted its wealthy customers to set up secret bank accounts.

These included 2,200 accounts with R23bn in total on behalf of South Africans.

Next year’s introduction of an international automatic exchange of information among tax authorities will be a powerful incentive for noncompliant taxpayers to use the window of opportunity provided by the new tax amnesty to regularise their financial affairs.

This week’s explosive release of the Panama Papers revealing the secret, foreign-held bank accounts of thousands of individuals and companies will heighten their insecurity.

"It is in the interests of all those hiding their assets to come clean and disclose, and the government offers such persons a way to legitimise their financial affairs before they are caught out," Mr Gordhan said in his statement on the Panama Papers.

He said in reply to another question by Mr Shivambu that 55 senior managers had left SARS since September 2014. Thirty-nine senior managers had voluntarily resigned, one had been suspended prior to a termination of employment, one had taken early retirement and 14 others had left for unspecified reasons.

Mr Gordhan added that 21 top executives, senior managers and specialists had been appointed over the period.

Although the minister did not say so, much of this turnover of senior staff related to the takeover by commissioner Tom Moyane.

He embarked on a fundamental restructuring of the tax authority and removed several of the senior executives he inherited from his predecessor. Several of the departures were also linked to the removal of those linked to the so-called rogue investigating unit within SARS.

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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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