The South African Revenue Service (SARS) announced, on 18 October, that it had appointed Natasha Singh, a chartered accountant with more than 20 years’ experience, as Director of its new ‘High Wealth Individual (HWI) Segment’.
SARS announced the establishment of the HWI unit in February to “focus on individual taxpayers with wealth and complex, and often offshore, financial arrangements”. As an early adopter of the international standard for the Automatic Exchange of Financial Account Information, SARS has started to receive information relating to overseas account holdings of South African taxpayers from 87 jurisdictions across the world.
SARS said it would be writing to affected taxpayers to request information about their offshore holdings. The request would be for relevant material for risk assessment purposes and would not signal the commencement of an audit process but might inform future action.
It also said that taxpayers who want to regularise their tax affairs are still able to do so through the ongoing Voluntary Disclosure Programme (VDP), which can offer more favourable terms for an assessment in terms of penalty amount.
Ms Singh holds a Master’s degree specialising in taxation. She joins SARS from Eskom where she served as Finance Executive: Group Insurance and Tax. SARS said her appointment was of strategic importance to help improve compliance of wealthy individuals with complex financial arrangements and was in line with its strategic objective to make it easy and simple for taxpayers to comply with their legal obligations.
SARS Commissioner Edward Kieswetter said: “We recognise the revenue contribution from this segment, in its various forms, to the Republic of South Africa. We also acknowledge the likely challenges that may arise, or currently exist with regards to the tax affairs and tax obligations of individuals and their families. Wealthy Individuals, tend to arrange their financial affairs in complex on- and off-shore structures, often masking their direct beneficial ownership and true income.”
Kieswetter said that the continuing revelations from global media regarding the financial transactions of high wealth individuals across the world, including the recently released Pandora Papers, was a matter that needs proper investigation by suitably qualified experts such as Ms Singh.
“Whilst our initial selection includes about 1,500 wealthy individuals and their related entities, to ensure focus, we will continue to extend our reach to include more individuals and families,” said Kieswetter. “While SARS is committed to assisting taxpayers with their legal obligations, the organisation is equally determined to detect and deter non-compliance.”
The HWI Unit is up and running and as promised, SARS has now sent out the first batch of ‘welcome letters’ to those who meet the criteria. If you have received a letter – or think you might be in line to receive one – now is the moment to ensure that all your tax affairs are up to date and capable of withstanding the harshest scrutiny.
If there are matters that have not been fully disclosed to SARS to date, this may be a good time to make use of mechanisms such as the VDP or to restructure your holdings to mitigate any ongoing risks. Sovereign can assist.