In a bold move to bolster state revenue and crack down on tax evasion, the South African Revenue Service (SARS) has set its sights firmly on the country's affluent elite and multinational enterprises (MNEs), aiming to staunch the flow of billions of rands leaving the country.
Under the stewardship of Commissioner Edward Kieswetter, SARS has launched an aggressive campaign dubbed 'follow the money', with high wealth (HW) individuals and MNEs squarely in its crosshairs. This initiative is part of SARS' broader compliance revenue program, which has already injected a significant R293.7 billion into state coffers.
Jashwin Baijoo, a representative from Tax Consulting SA, emphasized the pivotal role of targeting high-profile taxpayers, stressing that non-compliance among the wealthy can result in substantial revenue losses for the nation. He lauded SARS' efforts, noting that the clampdown on non-compliance sets a crucial example for the rest of the country.
Central to Kieswetter's strategy is the creation of specialized units such as the High-Wealth Individual Unit, aimed at tackling the intricate tax structures and offshore investments often favored by HW individuals to minimize their tax liabilities. Additionally, the insertion of Advanced Pricing Agreements into law has further strengthened SARS' capacity to combat tax evasion.
Despite the R12.5 billion collected from high wealth individuals last year, SARS remains undeterred, signaling its determination to intensify scrutiny in this segment. The recent establishment of the High Wealth Individual Unit and the implementation of the Approval for International Transfer (AIT) process underscore SARS' commitment to tightening its grip on the affluent.
Jashwin Baijoo highlighted the trend of South Africans exploring offshore investments to optimize their tax affairs, despite a decline in high-wealth emigration applications. He revealed that AIT applications amounted to R13.6 billion in the last reporting period, with only R7 billion approved. Delays in processing such applications often stem from concerns over the legitimacy of the funds involved, prompting thorough risk reviews by SARS.
Kieswetter has urged taxpayers to ensure their affairs are in order before applying for international transfers, signaling SARS' determination to root out illicit financial practices and safeguard the nation's fiscal integrity.
As SARS intensifies its efforts to target tax evasion among the wealthy elite, South Africa's high-net-worth individuals and multinational enterprises find themselves under unprecedented scrutiny. The outcome of this crackdown will not only shape the country's revenue landscape but also send a clear message that tax evasion will not be tolerated in the Rainbow Nation.
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