SARS working to get South Africa off the greylist

The South African Revenue Service’s compliance crusade will raise the country’s regulatory and compliance monitoring to be on par with international standards and hopefully aid in removing South Africa from the Financial Action Task Force’s (FATF) greylist.

This is according to Tax Consulting SA’s head of strategic engagement and compliance, Jashwin Baijoo.

He said SARS and the Companies And Intellectual Property Commission (CIPC) have made significant efforts in cracking down on industry roleplayers to ensure compliance.

For example, on 27 June 2024, SARS announced its enhanced Beneficial Ownership disclosures for the 2024 Filing Season. 

Not even 24 hours later, the CIPC issued a media release enforcing Beneficial Ownership declaration to be able to file annual returns. 

“This may simply be a compliance coincidence, but more likely a strategic move to eradicate non-compliance for companies, trusts, and partnerships on all levels,” Baijoo said.

“Remember, full disclosure of Beneficial Ownership in all legal entities, including companies, trusts and partnerships, is required by both the CIPC and SARS, in the form of Beneficial Ownership registers and declarations on both company and individual tax returns.”

He said these registers not only help ensure accountability in financial transactions but are also integral to furthering international cooperation and exchanging accurate Beneficial Ownership information with foreign competent authorities.

“In the furtherance of SARS’ ongoing compliance crusade, the newly implemented requirements by both organisations are far from arbitrary,” Baijoo said. 

“They give credence to raising South Africa’s regulatory and compliance monitoring to be on par with international standards, and hopefully aid in removing South Africa from the Financial Action Task Force’s greylisting.”

In 2023, the FATF “greylisted” South Africa after it received poor marks for its efforts to combat money laundering and terrorism financing.

While the country is on course to exit this global dirty money watchlist next year, challenges remain in addressing system shortcomings, according to the National Treasury.

The FATF Action Plan for South Africa, under Immediate Outcome 5, lists Beneficial Ownership sharing with other competent authorities.

“It appears that, in an effort to ensure timeous execution of IO5, both SARS and the CIPC have implemented their respective new requirements and enhanced compliance processes around taxpayer Beneficial Ownership Registers and declarations,” he said.

From 1 July 2024, the CIPC is strictly enforcing the submission of Beneficial Ownership Declarations to the point where you cannot file your Annual Return without one.

In its 28 June 2024 media release, the CIPC said the following about this compliance enforcement measure:

“Taking the far-reaching impact of incorrect Beneficial Ownership disclosures into account, understanding and complying with these requirements is essential for all affected taxpayers, particularly those involved in partnerships, companies, and trusts which engage in international transactions,” Baijoo warned.

“At a high-level overview whilst encompassing the basics, all individuals who either own or in some manner, exercise control over a company, are considered to hold Beneficial Ownership in that company.”

In the case of a Partnership, for the 2024 Filing Season, taxpayers are now required to “complete the details of partners (excluding yourself)” on their individual tax returns, ensuring alignment with the existing Beneficial Ownership requirements and prior disclosures.

This includes people who – 

  • Hold a beneficial interest in shares of the company;
  • Are able to exercise voting rights and director changes in the company;
  • Are able to control voting on company decisions or director changes in the company or
  • Holds the power to materially influence, either directly or through a chain of control, the management of a company, or other legal entity, body of persons, partnership, or other persons acting under the provisions of a trust agreement.

“If you exercise direct or indirect control over the operations of a company, partnership, or another form of legal entity, active steps must be taken immediately to ensure compliance with your 2024 Filing Season obligations,” he said.

“To ensure your company, partnership, or trust does not fall foul of these new enhanced compliance processes and keeps your focus on your business’s continued success, it is recommended that these administrative functions be outsourced to the experts.” 

“Time is money, and it only makes sense to use a seasoned CIPC and tax specialist who understands how to seamlessly navigate the new enhanced compliance requirements.”


Top JSE indices