The South African Revenue Service (SARS) issued the Irish Tax Authority (ITA) in March with an exchange of information request in respect of South African resident Airbnb hosts in Ireland that were suspected of either not declaring, or not fully declaring, their income.
Acting on this request, the ITA immediately required Airbnb Ireland UC to disclose information concerning income generated its online accommodation booking platform by South Africans who have properties let out on the Airbnb platform in Ireland. The request related specifically to transactions made during the 2018/19 and 2019/20 tax periods.
This action follows recent cautions by Commissioner Edward Kieswetter that SARS would increasingly target non-compliant taxpayers – both domestically and abroad. South Africans taxpayers that have failed to fully declare their income to SARS may be liable for penalties of up to 200% of their capital tax liability. SARS may also pursue administrative or criminal actions against such individuals.
To avoid such sanctions, taxpayers are encouraged to declare previously undeclared income to SARS via the ongoing Voluntary Disclosure Programme (VDP). Regulated by the Tax Administration Act 2011, this facility gives South African taxpayers the opportunity to regularise their tax affairs, with the possibility of reduced penalties and interest charges for tax default, as well as some form of protection from prosecution for tax offences – but only if they approach SARS before any non-compliance is detected.
From 1 March 2001, South Africa moved from a source-based to a residence-based tax system for individuals, which means that resident taxpayers became subject to tax on their worldwide income while non-residents became subject to tax on income from a source within South Africa. Many South African taxpayers with property abroad are unaware of (or have chosen to ignore) this change in their tax liability and which jurisdiction has the taxing right.
Airbnb has reached agreements with a number of tax authorities around the world, including SARS, to share earnings information for a cross-section of hosts with Airbnb listings in their respective countries. In South Africa, Airbnb offers ongoing support to hosts, with dedicated emails including information to setting out their tax obligations, including a dedicated South African Tax Hub, which provides additional resources including webinars and articles that address tax-specific topics.