True to its word, the South African Government has concluded a number of exchange of information agreements with so-called perceived tax havens so as to address the perceived risk that amounts may be hidden by South African residents in these types of countries. Of late, agreements have been published with the Cayman Islands, Jersey, Guernsey as well as San Marino. A number of other agreements are in the process of being ratified.

These agreements provide for the exchange of information between countries party to such an agreement upon request. Should the information in the possession of a specific country not be sufficient to enable such country to comply with the request for information, the country is obliged to use at its own discretion the information gathering measure it considers relevant to provide the other country with the information so requested. This is notwithstanding the fact that the requested party may not need the information for its own tax purposes. Recently a scenario arose where the Australian Government requested information from the South African Government in relation to the affairs of an Australian tax resident. Even though the request did not relate to the tax position of the taxpayer in South Africa, it was held that the information still had to be provided.

The information to be provided, extends to information held by banks, financial institutions and any other person acting in an agency or fiduciary capacity. It includes information about settlors, trustees, beneficiaries and protectors of a trust, units issued by a collective investment scheme and the like.

Taxpayers should appreciate that the world has become very small and that it would no longer be possible to hide assets in perceived tax havens without the ability of the South African fiscus to obtain information about that.

Written by Emil Brincker, Director and National Tax Practice Head, Cliffe Dekker Hofmeyr