SARS Sets Up New Unit for Wealthy Taxpayers
The South African Revenue Service has announced the formation of a High Wealth Individual (HWI) Taxpayer Segment, which will focus on wealthy taxpayers with complex financial arrangements. “For SARS to continue to provide a customised and seamless service to various categories of taxpayers, we are establishing a separate unit to focus on individual taxpayers with […]
The South African Revenue Service has announced the formation of a High Wealth Individual (HWI) Taxpayer Segment, which will focus on wealthy taxpayers with complex financial arrangements.
“For SARS to continue to provide a customised and seamless service to various categories of taxpayers, we are establishing a separate unit to focus on individual taxpayers with wealth and complex financial arrangements,” said SARS.
Making the announcement in a statement on Wednesday, the revenue service said the unit will initially be co-located within the Large Business & International Taxpayer Segment (LB&I).
SARS said it is committed to its strategic intent to develop and administer a tax and customs system based on voluntary compliance.
SARS believes that most taxpayers want to fulfil their legal obligations voluntarily.
“In this regard, SARS provides clarity and certainty to taxpayers to fulfil these obligations, and works diligently to make it easy and seamless to transact with the organisation. Equally important for SARS is to make it hard and costly for those taxpayers who do not comply.”
With regards to the new unit, SARS said it will be offering a differentiated service, “as we do with other tax types, to the individuals with significant wealth often derived from multiple sources other than a salary, and who employ complex, and often offshore, financial arrangements”.
“We believe that statements of assets and liabilities often say more about their financial affairs than statements of income,” SARS said.
The revenue service has embarked on a journey to foster a culture of voluntary compliance.
“Consequently, we have been paying particular attention to taxpayers with undeclared offshore holdings to optimise compliance. As an early adopter of the international standard for the Automatic Exchange of Financial Account Information, SARS has at its disposal information relating to offshore account holdings of South African taxpayers, some which seems not to have been declared.”
Information in SARS’ possession shows possible non-compliance by a number of these taxpayers.
In 2016/17, taxpayers were given the opportunity to regularise their tax affairs to account for their offshore holdings through the Special Voluntary Disclosure Programme (SVDP).
Taxpayers also had the opportunity to do so through the ongoing Voluntary Disclosure Programme (VDP) under the Tax Administration Act, 2011.
Some taxpayers took advantage of this. However, despite the window of opportunity to regularise their tax affairs, some taxpayers chose not to do so.
“The information that SARS has received comes from 87 jurisdictions across the world, detailing the offshore financial holdings of South African taxpayers. We intend to undertake a careful review of the information and audit it, where necessary.”
SARS will be writing to the affected taxpayers to request information about their offshore holdings.
Taxpayers who want to regularise their tax affairs are still able to do so through the ongoing VDP, which offers more favourable terms for an assessment (in terms of penalty amount).
“SARS therefore encourages taxpayers with undisclosed assets to take advantage of the VDP process. Taxpayers are reminded that failure to do so may result in administrative or even criminal action being taken against them,” it said.
Meanwhile, a dedicated email address – HWI@sars.gov.za – has been set up to manage responses from affected taxpayers and adopt a consistent approach.
Affected taxpayers who wish to make use of the ongoing VDP and taxpayers who have not yet been contacted are advised to contact the VDP Unit directly at VDP@sars.gov.za. – SAnews.gov.za