Watch out non-compliant tax payers: SARS now has power to access offshore accounts

The South African Revenue Service (SARS) will soon have unprecedented access to South Africans’ offshore financial information The South African Revenue Service (SARS)will soon have unprecedented access to South Africans’ offshore financial information. Starting next month, the revenue service will begin receiving bulk financial data from more than 120 jurisdictions under expanded Automatic Exchange of Information standards developed by the Organisation for Economic Co-operation and Development. The new framework will allow SARS to systematically obtain details of foreign bank accounts, investments, trusts and digital asset holdings linked to South African tax residents.

According toJashwin Baijoo, Partner and Head of Strategic Engagement & Compliance at TaxConsulting South Africa, the development significantly strengthens SARS’ ability to verify offshore disclosures. “The investigation into South African taxpayers’ offshore interests has long been on the cards with SARS, with foreign asset/income disclosure notices being issued as far back as 2020, entailing a blanket disclosure of offshore assets,” Baijoo said. “At the time, many taxpayers may have thought best to feign ignorance, but now, there is no escape for the non-compliant South African taxpayer, with over 120 countries playing open cards with SARS,” Baijoo added.

“How this has played out practically is the revenue authority has risen to the occasion, with aggressive collection steps being implemented against historically non-compliant taxpayers, including salary garnishes, Sheriff callouts, and even taking money directly from business and/or personal accounts. The extension of SARS’ reach has now been concretised, empowering SARS further to reach beyond the shores of South Africa and obtain all necessary information.” Baijoo added that taxpayers with offshore interests should ensure their foreign income and assets are accurately declared. “In order to protect yourself from a wall of penalties and interest, even possible jail time, it remains the best strategy to always ensure compliance. “Where you find yourself on the wrong side of SARS, there is a first mover advantage in seeking the appropriate tax advisory, ensuring the necessary steps are taken to protect both yourself and your family from paying for your crimes of non-compliance.”