Declare your offshore assets now

Government has announced that the voluntary disclosure rules that allow individuals and companies with undisclosed offshore income and assets to regularise their affairs, will be relaxed for a period of six months from October 1 this year.

Speaking in parliament during his Budget Speech on Wednesday, finance minister Pravin Gordhan said with effect from 2017, international agreements on information sharing will enable tax authorities to act more effectively against illicit flows and abusive practices by multinational corporations and wealthy individuals.

“Building on the expertise gained by the Large Business Centre since its establishment in 2004, Sars is well placed to take advantage of the new Common Reporting System,” Gordhan said.

The Common Reporting Standard (CRS) is a set of global standards that govern how tax authorities in participating countries share information about the financial assets of their taxpayers.

South Africa is one of the “early adopters” of the CRS. This group of countries started to collect information in January and will likely start sharing it from September 2017 onwards.

The CRS was compiled by the Organisation for Economic Co-Operation and Development (OECD) on behalf of the G20 countries in an effort to ensure they could access the tax revenue on all the offshore assets of their taxpayers.

While governments generally perceive these assets as a significant opportunity to increase tax revenue, this can only be done if the taxpayer discloses these accounts or if financial institutions provide authorities with the data. In terms of the CRS, the governments of signature countries have moved the burden of collecting data onto financial institutions.

Gordhan said the draft bill on the special voluntary disclosure program and the rates and threshold bill would be published on its website.

According to the Davis Tax Committee’s first interim report on estate duty, 42 672 South Africans participated in the income tax and exchange control amnesty in 2004. The process identified and brought assets in excess of R68.6 billion into the local tax system, while exchange control levies equalled R2.9 billion.

-Moneyweb