South Africa Targets Richest Taxpayers
September 17, 2012 Taxation in South Africa
PRETORIA – South African tax authorities are trying to shine a light on the tax affairs of the ultra rich in an effort to cut down the occurrence of tax evasion committed by the country’s most affluent taxpayers.
In an interview published in national newspapers on September 16th, the spokesperson for SARS Adrian Lackay explained that ultra-rich individuals face the same tax filing obligations as all other taxpayers, but the tax affairs of the rich can be much more complex, and, in some instances, affluent taxpayers can use trusts and companies registered in South Africa and overseas to hide their true incomes.
According to SARS, South Africa currently has 2 300 individuals who are considered to be wealthy, and pay an average of ZAR 1.7 million in taxes each per year.
Through its investigations the SARS has found that 467 of these wealthy individuals currently have notable discrepancies between their declared incomes and their assets, and will be subject to a SARS investigation during the year.
Investigations which have already been conducted this year show that the taxpayers with discrepancies in their tax returns are linked to an average of 10 associated business entities, and 87 percent of their associated companies still having outstanding tax returns.
Nearly 67 percent of the trusts associated with the investigated individuals show evidence of significant under reporting of incomes.
In an effort to cut down on the use of associated business entities to hide personal incomes, the SARS will expand its efforts to collaborate with foreign tax authorities to gather more data on South African tax payers who register overseas companies.
Further efforts will also be made to use information gathered from third parties in South Africa in order to determine whether the rich taxpayers are declaring their full incomes.
Photo by Lorenia