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The South African Revenue Service (SARS) has released guidance, in a question and answer format, for financial institutions (FIs) seeking to understand the impact of the OECD's Common Reporting Standard (CRS).
The Organisation for Economic Co-operation and Development's CRS obliges countries and jurisdictions to obtain financial information from their FIs and to exchange that information automatically with other jurisdictions on an annual basis. In South Africa, reporting FIs will, pursuant to legislative amendments to the Tax Administration Act (TAA), be bound by statute to obtain the information and provide it to SARS.
The answers to the guide's questions note that, under the wide CRS approach taken by SARS, FIs must report on all non-South African account holders and controlling persons, irrespective of whether South Africa has an international tax agreement with their jurisdiction of residence or whether the jurisdiction is currently a CRS participating jurisdiction.
It is pointed out that SARS' approach "eases the compliance burden on FIs more substantially, and provides information to SARS that may be useful for domestic tax purposes."
SARS also emphasizes that the account information it receives will not be exchanged with the relevant jurisdiction(s) until a bilateral or multilateral agreement for the automatic exchange of information with South Africa is in place. The information will constitute "taxpayer information" under the TAA and will therefore be subject to strict confidentiality provisions.
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