The South African Revenue Services (SARS) will come down hard on South African tax evaders who hide or withhold information relating undeclared offshore funds.
From 2016, the Common Reporting Standard (CRS) will come into operation, effectively making tax evasion impossible.
The CRS is a set of global standards that govern how participating tax authorities exchange information with each other about the financial assets of its taxpayers.
It was drawn up by the Organisation for Economic Co-Operation and Development (OECD), on behalf of the G20 countries – and over 70 countries have signed up, including South Africa.
According to fiduciary specialist at AlphaWealth, Judy Snyman, under the Tax Administration Act, the penalties which SARS may impose on tax evaders are capped at 10% for intentional tax evasion and 5% for gross negligence where a taxpayer makes a voluntary disclosure before notification of an audit.
If, however, these funds are found out after notification of an audit, the penalties increase to 75% and 50%, respectively.
“The penalties for breach of exchange control regulations imposed by the Reserve Bank are determined on a case by case basis, but these are also likely to be significantly higher once the CRS comes into operation,” Snyman said.
In September it was reported that as much as R10.8 billion leaves South African shores illicitly, through undeclared transactions.
As for South African money ‘hidden’ in Swiss bank accounts, the Financial Transparency Coalition revealed in October that as much as $2 billion (R28 billion) is being held by SA citizens in HSBC Swiss bank accounts.
Most of the countries who signed up to the CRS, including South Africa, will start collecting data from 1 January 2016 with a view to making the first exchange of data in September 2017.
There are a few countries including Switzerland that will only start collecting data in 2017 with a view to making the first exchange of data in 2018.