SARS warning for South Africans with offshore investments

Increased global data sharing means South Africans taxpayers with undeclared foreign assets are more likely to be uncovered and risk penalties of up to 200%, significant interest, and even criminal liability.

“If you are a South African taxpayer with offshore interests, the landscape in which you operate is undergoing a fundamental shift,” warned Shepstone & Wylie Attorneys.

“Increased international cooperation and enhanced domestic oversight mean that the days of ‘offshore privacy’ are largely behind us.”

This is because the South African Revenue Service (SARS) has strengthened its ability to detect undeclared foreign assets.

This includes bank accounts, investments – including digital assets like cryptocurrency – and offshore asset-holding structures like companies and trusts.

Starting on 1 March 2026, SARS began receiving bulk financial data from over 120 jurisdictions through expanded Automatic Exchange of Information standards.

This framework allows for the systematic collection of data on foreign assets and structures directly linked to you as a South African resident.

To process this influx of information, SARS appears to be recruiting specialists such as forensic investigators, wealth management specialists, and data scientists.

“Simply put, SARS now has the data, and they are ensuring that they have the technical skills to utilise it to its full potential,” Shepstone & Wylie Attorneys said.

“Should SARS become aware of your undeclared offshore assets and/or income, you could face penalties of up to 200%, significant accrued interest, and even criminal liability.”

They advised that South African taxpayers who need to regularise their affairs should consider SARS’ Voluntary Disclosure Program (VDP).

“Proactively initiating a VDP is the most effective strategy to manage the risks of non-compliance.” Acting swiftly is also of the utmost importance.

Once SARS sends a notification that an audit or a criminal investigation has commenced regarding a non-declaration, taxpayers can no longer take full advantage of the VDP.

When this happens, the taxpayer’s application will either be denied in its totality or the penalty remission will be capped.

Life raft for South African taxpayers

Shepstone & Wylie explained that successfully concluding a VDP agreement provides taxpayers with significant legal protection.

“Most notably, SARS is prohibited from pursuing criminal prosecution for tax offences arising from the disclosed default.”

“Additionally, you are granted relief from understatement penalties to a specified extent as outlined in the statutory penalty tables.”

The program also offers 100% relief from administrative non-compliance penalties, though it does not apply to penalties for the late submission of a tax return.

While the program does not allow for the remission of interest, the Minister, in his recent budget speech, proposed addressing interest with a concurrent request for remission from 1 March 2026.

The statutory framework sets out specific requirements and limitations for your disclosure to be considered valid, such as:

1. The application must be voluntary, meaning it must be made before the taxpayer is notified of an audit or investigation into that specific default;
2. The submission must be full and complete in all material respects, covering defaults such as submitting inaccurate information or failing to submit information entirely;
3. The default must not have occurred within five years of a similar previous disclosure; and
4. The disclosure must not result in a refund being due to you by SARS.

Those who are hesitant to come forward can seek a “no-name” non-binding private opinion from a senior SARS official.

Shepstone & Wylie explained that this allows taxpayers to determine their eligibility for relief without initially revealing their identity.

“If the application is eventually approved, it culminates in a written VDP agreement that details the material facts of the default, the amount payable and the specific payment arrangements.”

“With the rapid modernisation of tax administration through artificial intelligence, advanced data science and real-time automated compliance, the window for undetected non-compliance is closing.”