Bermuda

South Africa negotiates tax information exchange treaties


By added on 05/08/2010

South Africa is negotiating pacts with six nations viewed as ‘tax havens’ that will oblige them to share information on offshore investments, MPs heard.

East Coast Radio reports that once the treaties are in place, Guernsey, the Cayman Islands, Jersey, Bermuda, the Bahamas and the landlocked enclave of San Marino will have to co-operate with requests from the SA Revenue Service (Sars) for information on assets held by its nationals.
"Prior to these agreements there was no co-operation. It is as simple as that and there was nothing much you could do about it,"Ron van der Merwe, Sars' director for international developments and treaties, told Parliament's
standing committee on finance.
"This
means they shall co-operate."
He said similar accords with other offshore financial centres were in the pipeline, mainly as a result of the work of the Organisation for Economic Development and Co-operation's Global Forum in the past year and a half to cut down on the abuse
of tax bases around the world.
Many countries traditionally known for their banking secrecy have made a significant shift since the global economic crisis prompted world leaders to rush to change financial and fiscal regulations, with US Presi
dent Barack Obama in the lead.
"For many years we tried to get some kind of exchange of information agreements with a number of them going and mainly we told to go away, and often we were just ignored. This has all changed in the last 1
8 months," Van der Merwe said.
"These have now become willing to engage in these tax information exchange agreements, and that has been a large step forward for us as a revenue authority as it finally enables us to have access to information with regard to what our taxpayers have in
vested in those jurisdictions.
"It is not utopia yet, it allows us to get this information on request. Utopia would be if there was an automatic exch
ange of information," he said.
But the treaties notably did not allow for bank secrecy or for domestic tax interest to be used as a bar
rier to transparency, he said.
Sars officials said the treaties would notably make it easier for South African authorities to gain access to bank accounts hiding what they suspec
t to be the proceeds of crime.
"We will be able to request information about those funds and apply for preservation order
s," a Sars official told Sapa.
But Van der Merwe said it equally enable the fiscus to collect its due from South Africans who are squ
irreling away assets offshore.
Sars will be able to access information about funds held in tax free accounts, and to tax them if the investments are taxab
le under South African law.
"If under domestic law they are liable t
o pay tax, then yes," he said.
Economists estimate that tax havens conceal some 13 trillion US of untaxed wealth -- at least twice the global aid budget to poor countries.