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New reporting standard will make Panama Papers exposé more frequent

Wednesday, 13 April 2016   (0 Comments)
Posted by: Author: Amanda Visser
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Author: Amanda Visser (Moneyweb)

Financial information will be shared automatically from next year.

The massive fallout since the Panama Papers exposé  again highlighted the importance of comprehensive measures to stem the tide of tax non-compliance.

The Organisation for Economic Cooperation and Development (OECD) last year adopted measures that are aimed at complete transparency and significantly more data availability to tax authorities globally.

The Panama Papers (millions of files from offshore law firm, Mossack Fonseca) revealed ways in which the rich and famous hid their money in so-called tax havens.

Multinationals have been in the firing line for decades, for mainly the same practices that enabled them to shift profits to low tax jurisdictions or to engage in complex transactional structuring to evade paying tax where it was due.

The OECD’s base erosion and profit shifting (Beps) initiative took almost three years to culminate in a set of action plans that will this year consume a lot of time, money and human resources from multinationals and tax authorities.

One of the key aspects of the plans relates to the automatic exchange of financial information of taxpayers between tax authorities. This process is gaining massive momentum and will be implemented next year. South Africa is part of this process.

The common reporting standard will ensure that the South African Revenue Service (Sars) is informed of the financial affairs of South Africans in each country which is a signatory to the exchange of information agreement.

More than 50 jurisdictions will start the first exchange of financial account information next year.

Keith Engel, CEO of the South African Institute of Tax Professionals, says taxpayers are under attack on two fronts.

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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.

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