The South African Revenue Service (SARS) is on the heels of 400 South Africans that were identified as persons of interest in the infamous Panama and Pandora papers.
SARS commissioner Edward Kieswetter told ENCA that it established a division to look more closely at high net-worth individuals (HNWI) and their assets.
“Wealthy people often have the means to structure their affairs so that it masks their true wealth,” he said.
When it comes to HNWIs, it is important to look at their income statements and balance sheets, said Kieswetter. This is why SARS now requires taxpayers to disclose their income, assets, and liabilities.
Kieswetter said that SARS had gained “useful insight” into South Africans with offshore assets and bank accounts in foreign countries.
The revenue service obtained this information through its partnerships with “about 100 jurisdictions”.
By working with its foreign partners SARS gained visibility, as well as the names and addresses, of 400 South Africans that were implicated in the Panama and Pandora papers.
“This will require us to follow up and engage with them,” said Kieswetter.
Panama and Pandora
The Panama and Pandora papers refer to leaked documents that revealed the personal financial information of the wealthy elite and global public officials.
The Panama papers consisted of 11.5 million leaked encrypted confidential documents that were owned by Panama-based law firm Mossak Fonseca.
It has been referred to as one of the biggest leaks in the history of data journalism.
The documents were leaked in 2016 by a German newspaper in collaboration with the international consortium of investigative journalists (ICIJ).
These papers implicated more than 214,488 offshore entities owned by various wealthy individuals.
The Pandora papers were an even larger leak in 2021 of nearly 12 million documents.
The ICIJ was also responsible for this leak and, through their efforts, exposed 35 current and former world leaders, 330 politicians and public officials in 91 countries and territories, fugitives, con artists, and murderers.
These papers revealed the – sometimes corrupt or illegal – offshore interests and activities of these individuals and their tax sheltering schemes.
Having offshore bank accounts or assets is not necessarily illegal. For example, tax shelters or havens are used to store assets and legally minimise tax liabilities.
It is, however, illegal to hide an offshore asset. Hiding such assets could result in tax evasion, which presents a particular threat to South Africa, as the country has a very small tax base.
Only 20% of all personal income taxpayers in the country pay 90% of total personal income taxes.
In South Africa, foreign assets are permitted, provided they abide by the country’s foreign exchange regulations and are declared properly.