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South Africa Acts Against Tax Evasion

by Lorys Charalambous,, Cyprus

14 May 2010

During his speech to parliament on the occasion of the vote on the 2010-11 budget, South Africa’s Finance minister, Pravin Gordhan, focused on the work of the South African Revenue Service (SARS) to improve compliance, both now and in the year ahead.

He disclosed that “third party data from employers and financial institutions has proved highly effective in identifying cases of tax evasion, including employers withholding PAYE deductions and taxpayers failing to disclose interest and other income. Other sources of data - including the stock exchange and registration data from other government departments - provide further scope for closing the net on the non-compliant.”

From September this year, SARS will require all those receiving any form of employment income – including those below the tax threshold – to be registered with SARS to help reduce the scope for non-compliance.

“The net is also closing in on those who have sought refuge in tax havens,” he said. “A number of jurisdictions that have previously been unwilling to share information with SARS have now signalled their willingness to do so.”

“Agreement in principle on the text of tax information exchange agreements has been reached with the Bahamas, Bermuda, Cayman Islands, Guernsey, Jersey and San Marino. Negotiations are in progress with another three jurisdictions and four more have signalled an interest in negotiations.”

He added that, in South Africa, “the success of collaboration between tax, financial and enforcement agencies in the broader financial and justice systems is also evident from significant progress made in the earlier identification and more efficient dismantling of complex fraudulent schemes.”

Those who seek to abuse the VAT system to defraud the tax authorities will, he continued, also be pursued – as recent arrests have shown. Increased export controls as part of the customs modernization programme will assist SARS in identifying fraudulent VAT refunds linked to exports.

A comprehensive report in our Intelligence Report series, examining in depth the situation of offshore transparency and secrecy in a number of the most prominent jurisdictions, is available in the Lowtax Library at and a description of the report can be seen at
TAGS: South Africa | compliance | tax | offshore confidentiality | tax information exchange agreement (TIEA) | law | budget | enforcement | offshore | agreements | Africa

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