Last February 2013, the National Treasury and SARS started negotiating with the United States Department of the Treasury to introduce an inter-governmental agreement (IGA) with regard to the Foreign Account Tax Compliance Act (FATCA). Wording of a draft IGA has been agreed upon, and will be signed at government level soon. This will open up access to relevant information about our own tax investigations in South Africa.
Once the IGA has been confirmed, South African financial institutions will inform SARS, who will then exchange this information to the US under a legal framework, in accordance with the existing double taxation agreement that exists between the US & South Africa.
SARS has identified, through other international developments that using the automatic exchange of information to identify non-compliant taxpayers using foreign accounts, there can be a way to combat offshore tax evasion.
This brings us to the BRS “business requirement specification” that SARS would like to implement, which will require automatic periodic reporting of specific information from financial institutions, regarding all non-residents, not just US citizens under FATCA. SARS will then be able to share this information, with any of its alliances, on a reciprocal arrangement.
This shows that South Africa is part of leading the way to a global movement of tax transparency and the exchange of tax information, to secure trust and fairness in the international tax system.
Please note that SARS offers a voluntary disclosure program for South African taxpayers who have not yet regularised their position with regards to thier offshore holdings.
Please contact us at PATC if you have any queries or need assistance with your tax responsibilities.