On 31 July 2023, National Treasury released their annual draft tax law amendments, for public comment. Although still at the draft stage, there are some pertinent proposed changes for which the supporting systems have already been implemented i.e., the “Beneficial Ownership Registers”.
Jashwin Baijoo
Head of Strategic Engagement and Compliance
Drawing from history, it appears that, regardless of feedback to dissuade Treasury on specific items, the proposed amendments are likely to mostly be promulgated into law. This follows the National Strategy on AML/CTF/CFP, to combat South Africa’s current grey-listing status, and further drives the “strategic intent” of SARS.
With these changes imminent on the horizon of our tax landscape, here are 7 key considerations for taxpayers to be aware of!
At a high level, the proposed changes are largely focused on the strengthening of tax treatment in South Africa, as well as making any non-compliance both “hard and costly”. In summary, these are the key changes that all South African taxpayers should be aware of:
From the proposed changes, and from a practical perspective, what this means is a more stringent verification process, with new measures being put in place to cast the net as wide as possible for the detection of non-compliance.
National Treasury has highlighted how crucial the proposed regulations are, to ensure transparency and accountability in all financial transactions, with a keen focus on the cross-border flow of funds. This will allow an inter-organisational determination of tax liability, whilst preventing tax evasion and profit shifting, as the benefitting parties will be more strictly monitored.
International cooperation will be facilitated through the proposed changes on Beneficial Ownership reporting, regularisation of interest rates on foreign currency loans, and substance requirements for the application of the “foreign business establishment” exclusion in relation to controlled foreign companies. This will further aid the agenda of tax-related information sharing between jurisdictions and will serve to bring the wide compliance net already cast, to a close.
In light of the automatic exchanges of information, any singular infringement, regardless of the ramifications, will become common knowledge amongst the various regulatory organisations. Simply having your advisor’s assurance that all stacks up is no longer sufficient, and the “trust but verify” approach should ideally be followed as a best practice.
Where uncertain of your, or your company’s obligations under the proposed legislative amendments, it is prudent to approach an astute corporate and tax attorney, to ensure the fulfilment of all legal obligations. Where already venturing into the realm of non-compliance, do not let these new changes be your undoing.
Engaging a diligent tax attorney not only ensures legal professional privilege on disclosures, but also being specialists in their own right, guarantees that the correct remedial measures are executed post-haste, whilst upholding the first mover advantage you gain from being proactive.
A crucial call to action for South African non-resident taxpayers