As published on businesstech.co.za, Friday 9 July, 2021.
South African Revenue Service (SARS) commissioner, Edward Kieswetter, says that the tax agency has sent letters to 275 wealthy individuals who have financial assets abroad under the new high High Wealth Individual (HWI) Taxpayer Segment.
He said that as of 1 July, 108 of the 275 taxpayers have responded to the agency, some have updated their information, while others have requested more time.
And this is only the start, the commissioner warned. “This activity is gaining momentum,” he said. The tax authority believes that local taxpayers have assets of more than R400 billion stashed offshore.
“SARS is aware of the increasing number of South Africans who have financial assets offshore, they have more than R400 billion rand in offshore accounts. We’ve identified around 10% of that, but we believe there’s still a lot to be explained,” Kieswetter said in a recent interview.
SARS, in February, set up the separate wealth unit to focus on individual taxpayers with wealth and complex financial arrangements
“We will be offering a differentiated service, as we do with other tax types, to the individuals with significant wealth, often derived from multiple sources other than a salary and who employ complex, and often offshore, financial arrangements.
“We believe that statements of assets and liabilities often say more about their financial affairs than statements of income,” the group’s commissioner said at the launch.
“SARS is on a journey to foster a culture of voluntary compliance. Consequently, we have been paying particular attention to taxpayers with undeclared offshore holdings to optimise compliance.”
As an early adopter of the international standard for the Automatic Exchange of Financial Account Information, SARS said it has at its disposal information relating to offshore account holdings of South African taxpayers.
SARS, through the OECD’s Automated Exchange of Information programme, exchanges information with 104 countries. Kieswetter said that SARS has signed with more than 100 jurisdictions to detect those South Africans with offshore financial assets.
In May, SARS began sending letters to some taxpayers, detailing its plans for the unit and how it will look at improving collections.
“Our mandate requires us to collect revenue to enable the government to build a capable state that ensures economic and social development for the well-being of all South Africans,” the letter stated.
To this end, SARS said it will focus on nine key objectives:
In an interview on 702 earlier this week, Kieswetter also addressed reports of growing threats from citizens of a tax revolt.
Civil society group Afriforum recently warned that government will need to take steps against corrupt officials or face a revolt from taxpayers. Afriforum said that taxpayers are growing increasingly disillusioned with corruption and a lack of service delivery.
On the more extreme end of ‘legal’ tax revolts, wealthier individuals are packing up and leaving the country, with many looking at different ways of moving money out of South Africa.
“What do you really achieve…just on the principle of committing a crime just because you feel justified that crime is permissible because somewhere else there is another crime being committed.
“We may as well then just give up and say we are a lawless society, and none of us will be the vanguard of protecting the law. So you cannot complain about lawlessness if you yourself contribute to it, just as a basic principle.”
Kieswetter said that by not paying tax, the people who are most punished are those who require services the most, and not ministers and politicians.