COMPANIES that are hell bent on ducking and diving in an attempt to dodge the tax man need to watch out as National Treasury proclaims that it will clamp down on those who do not comply with South Africa’s tax laws.
Finance Minister Malusi Gigaba called for businesses and corporates to obey the law by disclosing their offshore assets before they are caught out.
Speaking at the annual Tax Indaba in Johannesburg earlier this week, Gigaba encouraged tax professionals to come forward and help government with snuffing out those who try to side step the tax man.
“We encourage you as tax professionals to help us send the message that individuals and businesses should obey the law, disclose their offshore assets, and pay their fair share, before they are caught out. Unfortunately, as long as taxpayers either remain non compliant or move to reduce their tax burdens, there will need to be corresponding tax policy amendments to uphold the integrity of the tax system,” he said.
He explained that this created a complicated tax regime, where even five days may be insufficient to discuss the many tax policy areas that have been subjected to change in recent years.
“Government does endeavour to remain highly consultative with the public on tax policy changes and welcome the oversight that Parliament provides.The 2017 Tax Indaba should be a fantastic opportunity to not only educate and inform others on the latest tax updates, but as a platform for meaningful discussion into how the tax system can best serve both those who pay tax in all its forms and our society,” said Gigaba.
Furthermore, he highlighted that government should not have a situation where individuals who can afford to pay for advisors or complicated structures end up paying less tax than those who cannot afford such services.
“The closing down of the use of interest free loans to trusts to avoid donations, tax and estate duty is an example of the measures we need to take to ensure equity between individuals. Action must also be taken to ensure corporates pay their fair share, which we are attempting to address through measures such as those which are currently proposed to stop the use of share buybacks and dividend stripping to avoid capital gains tax.
He further revealed that an area where government will increasingly devote attention to is arresting illicit financial flows.
“Several studies including Former President Thabo Mbeki’s High Level Panel on Illicit Financial Flows, reports by Global Financial Integrity and the Panama Papers demonstrate how African countries lose billions of dollars per year to trade mispricing, illegal offshoring by the wealthy for tax evasion, as well as by criminals and corrupt persons.”
“National Treasury, the South African Reserve Bank and SARS are tightening controls in these areas. Our signing of the Financial Intelligence Centre Amendment Act in June this year was an important step in enhancing our ability to combat corruption, money laundering and illicit financial flows,” he added.