South Africa

SARS tax clampdown

The South African Revenue Service (SARS) is clamping down on tax avoidance and evasion through complex company structures.

The latest intervention is to force all South African companies and close corporations to register their beneficial owners with the Companies and Intellectual Property Commission (CIPC).

SARS Commissioner Edward Kieswetter explained that it is important to see who benefits economically from company ownership.

He said the Financial Action Task Force (FATF) highlighted the importance of connecting legal ownership with beneficial ownership.

“Very often, rich families put their wealth in companies or legal entities which mask the fact that the family is the true beneficiary,” he explained.

“They place it one or two steps away from themselves to mask the fact that the family is the true economic beneficiary.”

Establishing beneficial ownership is, therefore, key to linking money flowing through companies or other legal entities to the people who benefit.

As such, the CIPC has started implementing a beneficial ownership regime.

Under this regime, any individual or entity holding more than 5% beneficial ownership of a company or close corporation must submit the beneficial owner’s information to CIPC.

Beneficial interest, when used in relation to a company’s securities, means the right or entitlement through ownership, agreement, relationship or otherwise.

The CIPC previously explained that the beneficial ownership register aims to establish a repository of natural persons who own or exercise control over legal entities.

This will assist law enforcement and SARS with relevant information regarding their investigations of who the ultimate owners of an entity are.

“With the implementation of the beneficial ownership register, customers will be required to report to the CIPC information regarding beneficial owners of companies,” it said.

CIPC Commissioner Rory Voller said they are committed to working with other regulators and financial institutions to mitigate against risks.

“With the implementation of the beneficial ownership register, we will enable greater transparency on who the real owners of an entity are,” he said.

“This will go a long way in preventing abuse of our corporate vehicles for nefarious purposes and assist South Africa to comply with the FATF requirements.”


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