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May 6, 2022

South Africa’s Minister of Finance proposes further disclosure of wealth

During his National budget speech, the South African Minister of Finance addressed certain tax proposals specifically targeting wealthy taxpayers, as part of a broader disclosure of the country’s wealth program. Currently, only provisional taxpayers with business interests (including all directors of companies and members of Close Corporations) are required to declare their assets and liabilities as part of their annual tax return to the South African Revenue Service (SARS). These assets are currently being disclosed at their historic cost.

The proposal is that all natural persons who are provisional taxpayers and who have assets above R50 million, will be required to declare specified assets and liabilities at market value in their 2023 annual tax returns. This proposal is intended to assist with the detection of non-compliance or fraud through the existence of unexplained wealth and wealth holding structures. It is believed by SARS and the Davis Tax Committee that understanding taxpayers’ assets at market value will provide a better understanding and ability to determine the levels and structure of wealth holdings, than simply considering income.

The High Net Worth Individual (HNWI) unit at SARS has already started its process over the last 12 months, with 275 letters having been sent to taxpayers with offshore financial assets. Commissioner Kieswetter said at the time of the launch of the HNWI unit that they plan to provide a differentiated service to individuals with significant wealth similar to the Large Business Centre and its top corporate taxpayers. SARS intends to focus on individual taxpayers with significant wealth, derived often from multiple sources other than salary, and who employ complex, multifaceted, and often offshore financial arrangements, as well as non-compliance in the form of undeclared assets and income.

Taxpayers should be cognizant of the fact that under the Tax Administration Act No. 28 of 2011, a false statement or entry in a return can be regarded as an offense leading to serious implications for the taxpayer, including the removal of prescription allowing SARS to go back as many years as they wish. Further implications include such false statement being considered a criminal offense. Prior to the latest tax amendments, a taxpayer could only be liable for a fine or subject to imprisonment if the transgression was committed “willfully and without just cause” i.e., with intention. Now the final amendment (initially Treasury proposed removing the requirement of intention completely) has adopted a differentiated approach splitting the list of non-compliance into: (i) offenses that require willfulness (intention), where the heavier burden of proof remains on SARS; and (ii) offenses where negligence alone will suffice to trigger potential criminal liability. An example under (i) would be where a taxpayer fails to reply or answer truly and fully any questions put to the person by a SARS official. Under (ii) it would be a failure to register for tax or to notify SARS of a change in registered particulars.

Next steps

Taxpayers should consult their tax practitioners as soon as possible to confirm if they are currently required to complete and submit a “Statement of Assets and Liabilities” or will be required, as result of the proposed amendment, to submit one in 2023. Accordingly, taxpayers should perform a proactive annual review their investment portfolio to determine any tax efficiencies of their assets prior to the 2023 year of assessment. This may also necessitate new valuations of current assets at market value, which have either not been disclosed before or have been disclosed at historic cost.


For additional information with respect to this Alert, please contact the following:

Ernst & Young Advisory Services (Pty) Ltd., Johannesburg

Ernst & Young Société d’Avocats, Pan African Tax – Transfer Pricing Desk, Paris

Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London

Ernst & Young LLP (United States), Pan African Tax Desk, New York


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